Management Information Assignment 1

Assume that your firm makes four products A, B, C and D. Data for the past period are as follows:

Product	Output Units	Production Runs in Period	Direct Labour Hours per Unit	Machine Hours per Unit	Material Cost per Unit	Material Components per Unit
A	25	3	2	2	30	8
B	25	4	4	4	75	5
C	250	7	2	2	30	8
D	250	10	4	4	75	6
Total		24

Direct Labour costs £7 per hour.

Overhead Costs:

Material Handling Costs £7650

Short Run Variable Costs £8250

Long Run Variable Costs:

Scheduling £7680

Set Up Costs £3600

Total £27180

Find the unit production cost:

a) Using labour hours or machine hours overhead recovery rate;

b) Using Activity Based Costing with the following cost drivers:

a. Short Term Variable Costs – Machine Hours

b. Scheduling Costs - Number of Production Runs

c. Set Up Costs – Number of Production Runs

d. Material Handling Costs – Number of Components

c) Compare the results from the two methods

Please ensure that your assignment bears your name and hand it to the Martran Office during week 8 of the course or earlier. Alternatively, please E-mail to: jon@kitto.co.uk Good Luck!