Accounting Report - Manufacturing

Words: 1500 + SpreadSheet Deadline: 17th March 2014 Referencing: Harvard Two Qualified Writers Required. Manufacturate plc is a small and very traditional manufacturing business. It is now involved in carrying out a review of some of its accounting procedures and has asked you to provide some background information for a management meeting taking place in the near future. Part (a) You are required to provide a response to each of the following points. 1) A discussion of the reasons why organisations normally charge indirect costs (overheads) to individual products in additions to the direct costs involved in making the products 2) An explanation of the stages involved in the determination of overhead absorption rates for each production department in a manufacturing company which uses the traditional approach to absorbing overheads such as Manufacturate plc. 3) A discussion of the different bases (e.g. Direct labour hours, machine hours etc.) that may be used for absorbing overheads together with the advantages and disadvantages of each method. 4) A brief discussion of Activity Based Costing as an alternative to the methods outlined in points 2) & 3) above, explaining why it may provide more accurate cost allocation. Part (b) You are required to use the data provided, on the following information sheet for Manufacturate plc, to construct a working spreadsheet which calculates the overhead absorption rate for each of the cost centres within the company.