Case Study - Bob's Gaming Bob's Gaming has established a large manufacturing facility outside of Leeds. The world market for gaming is competitive, consequently it is vital that Bob can make a standard game for less than 40 as this will enable him to sell the games for under 60. The finance director has been collecting the financial information needed to calculate cost per game in the next financial year. You have been asked to work on this and the finance director wants you to complete the costing exercise using the absorption costing method. Exercise 1: Absorption Costing: The information and data you have been given to carry out the absorption costing exercise is detailed below The company has two production departments: circuiting and assembly. The circuiting department prepares the complex electronics and the assembling department completes the game by putting the circuits into the casing and fitting all of the components together. The company also has three service departments: purchasing, maintenance and testing, which support the smooth operation of the business. The company absorbs overheads on the basis of direct labour hours. You have been given a template to help you with this exercise. The expected overheads for the next year are: Production Department Es Circuits 5,000 Assembly 10,000 Service Departments Es Purchasing 22,500 Maintenance 40,000 Testing 22,500 The work of the service departments is split as follows: Circuits Assembly Purchasing 30% 70% Maintenance 75% 25% Testing 55% 45% The direct labour hours in the next year are expected to be as follows: Circuits 20,000 hours Assembly 5,000 hours The variable cost of producing a game is s: Foundation Diploma