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A local manufacturing firm produces three product lines, namely X, P and D. You are required to accumulate the product cost (i.
Required:
i) List of all direct and indirect costs that should be assigned to Product line X.
In the case of indirect costs, you must first identify the indirect costs, then calculate and apply the overhead rates to Product line X.
Calculate the total product cost of Product line X from these calculations.
ii) For each of the items in your list in (i), explain why you have treated it as direct or indirect. Your explanation should demonstrate (a) your ability to apply the theory informing whether costs are categorised as direct or indirect, (b) your ability to combine this theory with relevant information provided in the case facts. (24 marks for i and ii)
AnswerStep 1 Issue of MaterialMaterial YQtyRate1050 $0.50 Opening StockPurchases:iiiiiiTotali)MaterialLaborOverheads:Overtime PremiumIndirect laborLubricant and cleaning compund...