Rodney and Dell's Case Establishing Departments and Product Costs. Rodney plc is a manufacturer of 'fhe Del', a revolutionary product in the home heating industry, among other home heating products. Currently the company is made of two operating [assembly and finishing:- and two service [maintenance and canteen] departments. The Chief Finance officer traced following specic costs for four departments: Operating Service Departments. Total Departments, 000 000 000 Costs, E'000 Assembly nishing Maintenance Canteen Indirect materials 181 160 60 0 401 Indirect labour 300 250 160 100 310 Other specic overhead costs us 5?5 350 60 1,460 Rodney Plc outsources cleaning operations and the accounting office has just been informed that the total bill for cleaning contract next year will be 1-\". 240,000. Furthermore the company will have to pay an additional 20,000 for IT equipment insurance. To allocate these costs the following information was gathered: Assembly Finishing Maintenance Canteen Total Direct labour hours 35,000 50,000 85,000 Machine hours 60,000 48,000 15,000 123,000 Number of employees 40 24 10 5 3'9 Value of IT Equipment {1 19,000 55,000 24,000 3,000 160,000 Floor area (sq. m] 35,?00 19,550 8,500 4,250 68,000 Required: Part 1: Constnsct an overhead analysis sheet and calcllate departmental allocation rates: a] Apportion the cleaning costs and the cost of IT insurance for Rodney plc to the four departments. State on which basis you have apportioned the costs. b] Apportion the total costs for the Maintenance and Canteen departments [including the cost of cleaning and IT Equipment insurance apportioned in part to the operating departments on an appropriate basis. State on which basis you have apportioned these costs. EMANlOESZM Fundamentals of Management Accounting c] Using the inform ation from parts [a] and {b}, calculate the overhead absorption {allocation} late for each production department based on machine hours for assembly and on direct labour hours for nishing department. We d] Rodney Plc is planning to launch a new product \"Dell". The product development team prepared the following data for the product: Direct Material costs Direct Labour Rate per hour . Direct Labour hours 10 hours 3 hours Machine hours 8 hours If- hours Calculate the full costs of making "Dell\". Solutions