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TASK 1 (A) What is a Prime Cost? Explain (3 marks) (B) RLG VOSTECK PLC manufactures supermarket trolleys in three production departments: Manufacturing, Finishing, and Packaging. RLG VOSTECK PLC also has three service departments: Quality Control. Stores and Maintenance. The company uses absorption costing system to analyse product costs and you have been supplied with the following information in relation to the production departments as indicated in Table 1 below: Table 1 Base Manufacturing Finishing Packaging Total Number of employees 12 10 15 37 Machinery value (s) 85,000 55,000 60.000 200.000 Factory area (square metres) 205 240 310 755 Factory volume (cubic metres) 22,000 40,000 41,000 103 000 Water usage (litres) 12.000 14,000 10,000 36.000 Machine hours 80.000 53 000 22.000 155.000 (B1) RLG VOSTECK PLC estimates to spend 70,000 for heating the factory during the year 2021, calculate the heating cost that should be allocated to each of the three production departments (5 marks) The following additional information has been supplied in Tables 2 and 3 respectively Table2 Manufacturing Finishing Packaging Maintenance Stores Quality Annual overheads 13.400,000 2,500,000 1.700.000 800,000 650,000 700,000 Table 3: % Usage of service departments Manufacturing Finishing Packaging Maintenance control Stores 0% Quality control 0% 20% 40% 30% 25% 30% 25% 20% 10% 0% Maintenance Stores Quality control 50% 30% 20% 0% 0% 0% (B2) Using the information provided in the tables above about the annual overheads and usage of each service by the production and other service departments, and if the overheads allocated to the three service departments are reallocated to the three production departments on the basis of usage, reallocate the service overheads to determine the total overheads after reallocation for each of the three production departments (22 marks) (Task 1 Total - 30 Markn)