QUESTION 2 (25 marks) You are given the following budgeted information for Cobblers Ltd. for the next year. Direct wages

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Question 2 25 Marks You Are Given The Following Budgeted Information For Cobblers Ltd For The Next Year Direct Wages 1 (34.12 KiB) Viewed 31 times

QUESTION 2 (25 marks) You are given the following budgeted information for Cobblers Ltd. for the next year. Direct wages Direct materials Depreciation Indirect salaries Rent & insurance Electricity £ 54,000 45,000 8,000 20,000 9,000 5,000 Hours 21,000 9,000 Machine hours Direct labour hours a) Using the above information, calculate the full cost of Job X3. Job X3 uses £20 in materials, 4 hours direct labour and 3 hours of machine time. (7 marks) *Page 2 of 5 b) Explain, with examples, direct costs and indirect costs. (3 marks) c) When calculating an Overhead Absorption Rate, discuss when direct labour hours, machine hours, and units are used. (4 marks) d) Discuss how the above method of Traditional Absorption costing, using a factory wide overhead rate, could be made more accurate, and the problems with this approach. (6 marks) e) What are the differences in approach and use of the Traditional method and the ABC method of costing? (5 marks)