ABC Ltd makes trailers. It receives a special order to produce 350 trailers for a local retail outlet. The order will take 2,100 kg of material that costs $16.10 per kg and will require 1,400 direct labour hours and 525 machine hours. The following are the expected/budgeted annual costs for ABC Ltd:

Direct labour $327,600

Direct labour hours 25,795

Direct materials $193,200

Indirect costs $98,400

Machine hours 9,840

Required: (must show your calculations/workings)

1. Calculate the overhead allocation rate: note that the process is labour-intensive (1/2 mark)
2. Calculate the total costs of the special order (1 mark)
3. Calculate the cost of the special order if ABC Ltd uses machine time as the basis for allocating overheads (1/2 mark)
4. Calculate the minimum price per trailer that ABC Ltd could accept. (1 mark)
5. Write around 200 words explaining how segmenting the overheads can help in allocating overhead costs to individual jobs or services. You must support your discussion by readings and research and acknowledge the source of your information (referencing). (2 marks)