Bookdon plc manufactures three products, X, Y and Z, in two product cost centres: a machine shop and a fitting section; it also has two service cost centres: a canteen and a machine maintenance section. Shown below are next year’s planned production data and manufacturing cost for the business.

X Y Z Production 4,200 units 6,900 units 1,700 units Direct materials £11/unit £14/unit £17/unit Direct labour Machine shop £6/unit £4/unit £2/unit Fitting section £12/unit £3/unit £21/unit Machine hours 6 hr/unit 3 hr/unit 4 hr/unit Planned overheads are as follows:

Machine shop Fitting section Canteen Machine maintenance section Total Allocated overheads £27,660 £19,470 £16,600 £26,650 £90,380 Rent, heat and light £17,000 Depreciation and insurance of equipment

£25,000 Additional data:

Gross carrying amount of equipment £150,000 £75,000 £30,000 £45,000 Number of employees 18 14 4 4 Floor space occupied 3,600 sq m 1,400 sq m 1,000 sq m 800 sq m All machining is carried out in the machine shop. It has been estimated that approximately 70 per cent of the machine maintenance section’s cost is incurred servicing the machine shop and the remainder servicing the fitting section.

Required:

(a) Calculate the following planned overhead absorption rates:

(1) A machine hour rate for the machine shop.

(2) A rate expressed as a percentage of direct wages for the fitting section.

(b) Calculate the planned full cost per unit of Product X.

AppendixLO1