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CENT Ltd produces a range of products. Manufacturing is undertaken using one of two processes: the Alpha and the Omega Processes. All of the products
CENT Ltd produces a range of products. Manufacturing is undertaken using one of two processes: the Alpha and the Omega Processes. All of the products are manufactured in batches. The current pricing olicy has been to absorb all overheads using direct labour hours to obtain total cost. recent detailed analysis has examined overhead cost; the results are: Analysis of overhead costs Cost per month () Monthly volume Alpha Process cost 192.000 960 hours Omega Process cost 89,600 2,560 hours Set-up cost 85,800 Handling charges 91,200 380 movements Other overheads 101,400 (see below) Total overhead costs 560,000 here are 2.000 direct labour hotars available each month. 520 set-ups wo of KENT's products are a JT101 and a GR27. JT10ls are produced by the Alpha Process in a imple operation. GR27s are manufactured by the Omega Process. Both products are sold by the metre. Details of the two products are: JT101 GR27 1.000 metres 500 metres Monthly volume Batch size 1,000 metres 50 metres Processing time per batch Alpha 100 hours Omega 25 hours Set-ups per batch I set-up 2 set-ups Handling charges per batch I movement 5 movements Materials per metre 16 15 Direct labour permetre (Direct cost) 1 hour hour Direct labour is paid at 16 per hour. 2. The cost of direct material per metre for GR27 is equal to 8 7.5 O 15 O 16
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