If the buy-in option is taken up, production would cease in the UK and fixed costs would be reduced by 120,000 per annum. Give the management advice based upon your calculations. What further information would you need in order to calculate an overhead absorption rate for each production department. Briefly outline some drawbacks in using traditional absorption costing techniques as the basis for making management decisions. The selling price for Nomopoly is 9.50 and for Crabble 6.50.
Production is on the basis of making the games the month before they are sold.
Packing 10 mins 5 mins Wages are 5.40 per hour for the assembly workers and 6 per hour for the packing workers. There are no stocks of raw materials held. He is aware that it is a bit muddled.