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Essay Details:
Essay text:
Thus the production cost of one unit based on recovering overhead in a traditional manner would be:
?
Direct material 18.50
Direct labour 29.58
Prime cost 48.08
Production Overhead:
Machining:
2.75 m/c hours x ?5.38 14.80
Finishing:
1.30 m/c hours x ?4.40 5.72
Packing:
0.5 labour x ?4.62 hours 2.31
PRODUCTION COST ?70.91
The accountant had however recently done some additional work and research on ABC technique. He presented the following notes and comments to the meeting for consideration by the SMT:
Accountants Notes and Comment
However in the more sophisticated businesses in flexible and rapidly changing product ranges traditional techniques have proved to be in certain scenarios less than adequate...
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