4.6 Shown below is an extract from next year’s plans for a business manufacturing three products, A, B and C, in three product cost centres.

The business operates a full absorption costing system.
Required:
Derive the total planned cost of:

(a) One completed unit of product A.

(b) One incomplete unit of product B, which has been processed by the cutting and machining departments but which has not yet been passed into the pressing department.

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Production Direct material cost A 4,000 units B 3,000 units 7 per unit 4 per unit C 6,000 units 9 per unit Direct labour requirements: Cutting department: Skilled operatives 3 hr/unit 5 hr/unit 2 hr/unit Unskilled operatives Machining department 6 hr/unit 1 hr/unit 1/2 hr/unit 1/4 hr/unit 3 hr/unit 1/3 hr/unit Pressing department 2 hr/unit 3 hr/unit 4 hr/unit Machine requirements: Machining department 2 hr/unit 1 hr/unit 2 hr/unit The skilled operatives employed in the cutting department are paid 16 an hour and the unskilled operatives are paid 10 an hour. All the operatives in the machining and pressing departments are paid 12 an hour. Planned total overheads Service cost centre Product cost centres Service cost centres Cutting Machining Pressing Engineering Human resources 154,482 64,316 58,452 56,000 34,000 Cost incurred for the benefit of other cost centres, as follows: Engineering services 20% 45% 35% Human resources services 55% 10% 20% 15%