HRRP (UK) Limited has been asked to submit a bid to publish Easylife, which is a monthly lifestyle magazine aimed at retired people planning to downsize. This is a long term contract, which will start at the beginning of the next financial year. HRRP (UK) Limited’s budgeted overheads for the next financial year are as follows: Maintenance £830,000 Set ups £742,500 Transport £731,000 In total there are, 200,000 machine hours, 6,750 set ups and 1,000 deliveries. Over a year it is estimated that this contract will use the printing machines for 120 machine hours. Estimates for the proposed contract are as follows: Direct materials per annum £2,000 Direct labour 48 hours per year @ £9,50 £ 456 12 set ups per annum 24 deliveries per annum Required: Using Activity Based Costing (ABC), calculate the cost driver rates and then calculate the total cost of the proposed job.
HRRP (UK) Limited has been asked to submit a bid to publish Easylife, which is a monthly lifestyle magazine aimed at retired people planning to downsize. This is a long term contract, which will start at the beginning of the next financial year. HRRP (UK) Limited’s budgeted
Maintenance £830,000
Set ups £742,500
Transport £731,000
In total there are, 200,000 machine hours, 6,750 set ups and 1,000 deliveries.
Over a year it is estimated that this contract will use the printing machines for 120 machine hours. Estimates for the proposed contract are as follows:
- Direct materials per annum £2,000
- Direct labour 48 hours per year @ £9,50 £ 456
- 12 set ups per annum
- 24 deliveries per annum
Required:
Using Activity Based Costing (ABC), calculate the cost driver rates and then calculate the total cost of the proposed job.
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