Portland Paving Ltd makes paving slabs sold to builders and garden centres. The business plans to produce 2,000 units over the next week and each unit requires the same amount of materials and takes the same time to produce. The expected costs for next week are as follows:

Required

(a) Prepare a costing statement for Portland Paving Ltd that shows the elements of cost and calculates the total cost of producing 2,000 slabs.

(b) Interpret your statement by explaining the following terms:
(i) Direct costs (ii) Prime cost (iii) Production cost (iv) Indirect costs (v) Total cost

Transcribed Image Text:

Rent: Factory Office Lighting and heating: Factory Office Power 4 1,000 400 2,000 800 700 (Continued)