Your company Twilight Ltd makes two products; the Wolf and the Vamp. The market is incredibly competitive, and Twilight has to conduct market analysis of prices in order to stay competitive. This year it plans to make 1,000 of the Wolf and 1,500 of the Vamp. Previous years the company has used absorption costing on a simplistic blanket rate apportioning on labour hours the overheads: The overhead absorption rate per unit for Wolf £26.10 and Vamp £32.63. Direct cost for Wolf was £100 per unit and Vamp £80 per unit. This year you, as the management accountant and your team have worked on preparing an analysis of the overheads using activity based costing.
Your company Twilight Ltd makes two products; the Wolf and the Vamp. The market is incredibly competitive, and Twilight has to conduct market analysis of prices in order to stay competitive. This year it plans to make 1,000 of the Wolf and 1,500 of the Vamp. Previous years the company has used absorption costing on … Read more