The assessment example(s) below can be used by centres, or alternatively centres
can develop their own assessment.
You have recently started work with Wee Toon Manufacturing who design and make
various textiles, and currently produce a very popular design of rug. Due to repeated
requests from customers for a larger size, management are considering this but first
they would like to know the projected costs of production and the expected retail
price.
The following information is available:
Material WT1 (£12 per kg) 42 kg 12.5 kg
Material WT27 (£22.50 per kg) 7.5 kg 1.2 kg
Material WT44 (£3.50) per kg - 0.5 kg
Skilled labour hours (£14.25 per hour) 32 17
Unskilled labour hours (£9.75 per hour) 7 2
Machine hours 46 -
Production overheads are absorbed into the cost of the product on the basis of
machine hours in the weaving department, and total labour hours in the finishing
department. Departmental overheads are expected to be as follows:
Weaving £450,000 25,000 30,000
Finishing £270,000 60,000 2,000
Administration overheads are applied at 12% of the prime cost.
Selling and distribution overheads are calculated as 15% of total production cost.
To cope with the increased size of the product, an additional piece of equipment
will need to be hired. The minimum hire period for the machine is 6 months at a
cost of £900 however, it is anticipated the rug can be produced within one month.
The company requires a profit margin of 30% on all its products.
Wee Toon Manufacturing are registered for VAT.
The product reference is WTM4678RUG (L)
Scottish Qualifications Authority 6
Assessment Support Pack/J56F 34/ASP001 (Fourth edition)
Accounting for Business: An Introduction (SCQF level 7)
can develop their own assessment.
You have recently started work with Wee Toon Manufacturing who design and make
various textiles, and currently produce a very popular design of rug. Due to repeated
requests from customers for a larger size, management are considering this but first
they would like to know the projected costs of production and the expected retail
price.
The following information is available:
Material WT1 (£12 per kg) 42 kg 12.5 kg
Material WT27 (£22.50 per kg) 7.5 kg 1.2 kg
Material WT44 (£3.50) per kg - 0.5 kg
Skilled labour hours (£14.25 per hour) 32 17
Unskilled labour hours (£9.75 per hour) 7 2
Machine hours 46 -
Production overheads are absorbed into the cost of the product on the basis of
machine hours in the weaving department, and total labour hours in the finishing
department. Departmental overheads are expected to be as follows:
Weaving £450,000 25,000 30,000
Finishing £270,000 60,000 2,000
Administration overheads are applied at 12% of the prime cost.
Selling and distribution overheads are calculated as 15% of total production cost.
To cope with the increased size of the product, an additional piece of equipment
will need to be hired. The minimum hire period for the machine is 6 months at a
cost of £900 however, it is anticipated the rug can be produced within one month.
The company requires a profit margin of 30% on all its products.
Wee Toon Manufacturing are registered for VAT.
The product reference is WTM4678RUG (L)
Scottish Qualifications Authority 6
Assessment Support Pack/J56F 34/ASP001 (Fourth edition)
Accounting for Business: An Introduction (SCQF level 7)
