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A discussion of the basis and reasons for charging overheads to individual production cost centres (Document 5) with particular emphasis on the following areas: a.
A discussion of the basis and reasons for charging overheads to individual production cost centres (Document 5) with particular emphasis on the following areas: a. Using the figures in the tables above, explain the basis of the overhead charges to the Graphics Processing Unit cost centre. (275-325 words); b. Using the figures in the table above to illustrate your points, critically discuss the process of absorption costing. (180-210 words).
Document 5- Full (absorption) costing Newtron Technologies Ltd's product costing team have provided you with the following information on the current method used to charge overhead costs to products. The table shows each overhead cost and the apportioned and reapportioned costs by cost centre together with the apportionment bases used Computer Processing Processors Memory Mainte Admin- nance istration Department Cards Total Units Direct costs Direct materials () 3,405,000 2,951,000 2,644,000 9,000,000 Direct labour () Overheads Indirect labour (E) Rent (E) Machine insurance 2,066,000 ,902,000 2,032,000 6,000,000 900.000 2,380,000 20,000 50.000 900.000 Heating () Machine power () Machine depreciation () 720,000 Value of machines 832,000 11,000 449,000 130,000 72 725,000 713,000 1,330,000 Floor area (m2) Machine hours Direct labour hours Employees 3,600,000 8,000 7,000 45,000 - 1,800,000 344.000 308 10,000 9,000 385,000 329,000 637,000 110,000 104,000 58 61 68 49Step by Step Solution
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