a) Using the companys current policy for pricing jobs, calculate the price charged for job Capulet.

b) Outline why departmental allocation of overheads proposed by the CEO can provide more accurate costing and pricing information.

c) Provide a revised calculation of the price charged for job Capulet using a departmental overhead allocation basis proposed by the CEO.

d) Determine the total under/over absorbed overhead for the quarter assuming a departmental overhead allocation basis was employed.

e) In the context of budgeting explain the term budgetary slack. Suggest two ways it can be minimised.

Mercutio Plastics supply the construction industry with customer specific plastic solutions. Manufacturing occurs within two separate departments: Cavity Moulding and Injection Moulding. A new competitor has recently entered the market and the CEO believes the company need to have a more accurate approach to pricing. Currently a mark up of 80% on manufacturing cost is applied to calculate price to be quoted for individual jobs. Budgetary estimates for the last quarter were as follows: In addition to the above, budgetary estimates for overheads for the last quarter were also available: All machine-related overheads are allocated equally between Cavity Moulding and Injection Moulding departments. IT support is allocated 80:20 to Cavity Moulding and injection Moulding departments respectively. The company currently allocates overheads to jobs using labour hours on a factory-wide basis. The CEO is keen to move to a departmental basis applying overheads to jobs based on the dominant activity in each department, as she believes this will result in more accurate costing and pricing of jobs. One job 'Capulet' was completed in the last quarter and required the following inouts: Section B continues on the next page.... At the end of the quarter, it was confirmed that actual overhead costs were as per budget expectations. The following differences in actual activity levels occurred