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Fork-Lift Trucks Ltd manufactures and sells two types of truck: The Lifter a basic truck and The Mover a more versatile truck. Fork-lift Tmcks' current

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Fork-Lift Trucks Ltd manufactures and sells two types of truck: The Lifter a basic truck and The Mover a more versatile truck. Fork-lift Tmcks' current product costing system traces the direct materials and direct labour to each product The total indirect costs are then allocated to products using direct labour hours as the allocation base. There are two seperate machining areas: General machines and Specialist machines. The company is reviewing its costing system in order to cost the indirect resources demanded by each product more accurately. A team of managers from accounting. manufacturing. storage and handling wishes to replace the single indirect-cost pool with five indirect-cost pools as shown below. The data is based on the sales forecast for the year ended 3151 March 2016 and the capacity required for that output. Budget information for the year ended 1'51"t March 2016: Lifter Mover Department ABC coat costs driver Number of motors 2,000 3,000 Direct product revenues and costs Selling price per motor 12,000 16,000 Direct material per motor 4,000 6,000 Direct labour-hours per motor 20 hours 30 hours (labour rate 15 per hour) Machining infonnetion General machine department hours 10,000 5,000 hours hours General machine department costs 2,000,000 Machine hours Specialist machine department hours 4,000 36,000 hours hours Specialist machine department costs 10.000.000 Machine hours Set-up and handling infonnaon Number of trucks per batch 50 15 Setup hours per batch B 15 Setup costs 2,656,000 Setup hours Number of different parts per motor 30 ?0 Handling hours per loadl 0.2 0.2 Handling costs 1,520,000 Handling hours Factory administration costs 3,324,000 Direct labour hours Total indirect departmental coats 19,500,0tltl IEach load moves the quantity of a particular part needed for the manufacture of a batch of products, e.g. Lifter has 30 different types of parts. so it takes 30 loads to transport the parts required for each batch of Lifter from the stores to production

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