Shamrock is a pizza manufacturer in Ireland and expects to make 1,345,000 Margherita and 882,000 pepperoni pizzas in the coming year. Paddy has been given information for the two manufacturing departments. Pizza bases are made in the bakery department, which has staff monitoring the production process and has estimated manufacturing overheads of €75,000. Once the pizza-base has been made, employees top the bases with tomato sauce, cheese, and a range of other ingredients by hand. The topping department has estimated costs of €87,000.

REQUIRED:

Using the machine and labour-hour information in Table 11.14:

a) Calculate a rate for the bakery department.

b) Calculate a rate for the topping department.

c) Apply these rates to calculate a cost of a Margherita and a pepperoni pizza (see Table 11.15).

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Table 11.14 Machine hours per 1,000 pizzas Labour hours per 1,000 Margherita pizzas Pizza-manufacturing data Bakery 0.75 Pizza topping 0.25 0.1 5.0 Labour hours per 1,000 pepperoni pizzas 0.1 6.0