Assignment 1

2018 Due date: 5pm (Sydney time), April 10 2018

Submit via Turnitin on the BlackBoard site.  Students should allow at least 60 mins to load up assignments as Turnitin will electronically cease accepting submissions at 5pm (AEST).

Each assignment-answer must have a cover sheet.  

The workshop presenter’s name must be disclosed on the coversheet.  Students who do not attend workshops must find out the name of presenter delivering the workshop they are enrolled in. 

Workshop-presenters will mark the assignments of students formally enrolled in their classes.  Students should not change workshops without securing course coordinator’s permission.

Submissions must be typed, not hand-written.  Tables can be constructed in Word – use the Table function to “insert’ a table into the Word document. 



Petral Ltd. Manufactures 2 products, W and Z using the same factory and facilities.  Details provided below:

Product line Vol of production Material (direct) cost per unit Direct labour per unit Machine time per unit Labour cost per unit
W 600 $6 0.75 hour 0.5 hour $4
Z 7100 $18 1.25 hours 1.75 hours $10


Production overhead is comprised of the following costs:

Description of cost Amount
Factory overhead related to machine activity $42,725
Set-up costs $8,725
Cost of handling materials $11,725
Administration costs for spare parts $12,725


The firm uses a plant-wide overhead rate based on Machine hours of $5.97 per machine hour.

However, an investigation of the activities (in addition to machine hours) that drive costs at the product-line level revealed the following relationships:

Product line No. of set-ups No. of times material was handled No. of spare parts
W 2 3 3
Z 9 13 5




  • Verify the firm’s plant-wide rate of $5.97 per machine hour. Show all relevant calculations.  (2 marks)
  • Compute all appropriate overhead rates using activity based costing. Round off all individual overhead rates to two decimal places.  Show all relevant calculations.  (2.8 marks)
  • Apply (1) and (2) to 2 product lines: that is, calculate the amount of overhead that should be allocated to Product-lines W and Z under the plant-wide rate and ABC rates. Show all relevant calculations.  (4.8 marks)
  • Compare the overhead allocations to product lines W and Z. (14.4 marks)


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