please write the answers in a paper. I would like to see the steps clearly, please. thank you 

 

BMAN10632/M SECTION B (40 marks)Answer ONE question out of a choice of two. Requirements: + You will need to show all workings and provide notes for your caleulations. # If necessary, round numbers to the nearest two decimal places (e.g., 5.13 insteadof 5.132 or 5.126). Question 16 Mount Top, Ltd. is a textile company, which produces two lines of clothing products,indoor range and outdoor range, for a premium clothing retailer. It has two preductiondepartments (Cutting and Sewing) and a service department (Maintenance). Due tothe cost-of-living crisis and high inflation levels, there has been a decline in customerorders for its outdoor range and the Company is considering discontinuing this range. The general overheads budgeted for next year are as follows: Total, £Rent and Rates 74,800Machine Insurance 30,000Canteen Cost 18,200Total 123,000 All specific overheads have been allocated to these departments. All departments arelocated in the same premise, the details of which, together with further additionalinformation are provided below: Cutting Sewing Maintenance Total Allocated overheads: Specific to each department, £ 19,860 25,000 9,700 54 560Additional information: Floor area occupied, square metres 3,520 4.400 880 8,800Number of employees 15 30 5 50Machinery value, £ 42,000 70,000 28,000 140,000Budgeted direct labour hours 36,200 41,400 - 77,600Direct labour rate per hour £ 5.20 6.00 6.30 - PART 1: OVERHEAD ALLOCATIONa) Prepare a table to calculate the total overhead costs budgeted for each departmentby using a suitable basis to apportion the general overheads between the threedepartments. Apportion the service department's overhead costs to the productiondepartments using the most appropriate cost allocation basis and calculate thetotal overhead costs for the production departments.(8 marks) Question 16 continues overleaf PTOPage 2 of 6 Question 16 continued PART 2: FULL COSTING The company is planning to produce the two product lines in the next year. Themanagement develops the budget based on the following information regarding thedirect cost of each set of clothing: Indoor Outdoor Range RangeSales price per unit £45 £55Number of units produced and sold per year 18,000 8,000Direct Material per unit £20 £30Direct Labour hours per unit: - Cutting Department 1.3 1.6 - Sewing Department 1.5 1.8Machine hours per unit: - Cutting Department 0.8 1.0Number of material orders per unit 9 4Number of quality inspections per year 300 100MNumber of machine sef-ups per year 110 90 b) Using your results from part (a), calculate the full cost for a unit of each line of ) d) product. The Cutting department is machine intensive and the Sewing departmentis labour intensive due to the unique features of the product ranges. (12 marks) Due to a reduction in customer orders and increases in material pricing for itsoutdoor range from its overseas supplier, management is considering the adoptionof activity-based costing (ABC) as they have heard that they may gain someefficiencies using this method. Along with the information presented above, thecompany figured out the following information about three cost pools: Activity Cost Pool Cost driverMaterial purchases £110,200 Number of material ordersQuality Inspection £44 400 Number of quality inspections Machine set-up £22960 Number of machine set-ups Use ABC method to calculate the full cost (per unit) for a unit of each product.(12 marks) Based on your results from parts (b) and (c), calculate the profit margin for eachunit of indoor and outdoor range under the traditional costing method compared tothe ABC method. Briefly comment on the profit margins of both products under thedifferent cost allocation methods and outline your rationale on whethermanagement should discontinue the outdoor range.(8 marks)PTO