1. 1. Stardust Ltd provided the following extract from its Budget

Manufacturing Packing

Overhead £8,000 £4,000

Machine Hours 750 100

Labour Hours 800 110

What could be an appropriate overhead absorption rate for the Manufacturing department? (Round to nearest 1p)

2. Brown Leaves Ltd lease an office in London. The rent is £20,000 per quarter, and the service charge is £5,000 per quarter. The lease runs until 31^st December 2028. On leaving the premises they will need to pay £15,000 dilapidations. In addition, they pay business rates of £20,000 per annum, which are payable only for as long as the office is in use. The lease includes an option to terminate the agreement early 31^st December 2024.

Brown Leaves Ltd are relocating to Manchester 1^st January 2029 with moving costs of £80,000 expected. They are considering moving to Manchester early, entering into a lease with the exact same terms as the current London office. If they decide to move early, they will relocate 1^st January 2024. What are the total relevant costs for this decision to move earlier?

3. Overheads for product New Wood are absorbed at £8 per machine hour. It takes 1 machine hour to make each unit of New Wood and closing inventory levels for the last two months were;

November 50 units

December 60 units

How would the profits for New Wood differ in December if using marginal costing instead vs absorption costing?

4. Brown Leaves Ltd determine their selling prices by estimating all of the costs of production, plus a proportion of overhead, plus their desired profit. What is this an example of?

5. Brown Bag Ltd anticipate the following production costs in production:

Dept One Dept Two

Direct materials £65 £12

Direct labour hours 4 3

Direct labour rate per hour £15.00 £13.00

Production overhead per direct labour hour £8.00 £12.00

Administration and other overhead 20% of full production cost

Profit margin expected is 40%

What should the selling price to the customer be (rounded to the nearest £1)?