1) Briefly discuss the different cost classifications which are relevant for a business like Raajje Fresh. 2) Using the information in Annex 1, identify the Fixed Costs and Variable Costs, showing them in a table.
You are Accountant of the company and you are being asked to submit a report to the Management
regarding following matters:
1) Briefly discuss the different cost classifications which are relevant for a business like Raajje
Fresh.
2) Using the information in Annex 1, identify the Fixed Costs and Variable Costs, showing them in
a table.
3) Using the table prepared in (2) above, prepare a break-even chart for the given period (with
clear labels).
4) Using the information in Annex 2, prepare an overhead summary, showing clearly the total
overheads for each department. Prepare the following calculations using the total overhead for
each department:
i. Calculate the Overhead Absorption Rate (OAR) based on Labour hours.
ii. Calculate Overhead Absorption Rate (OAR) based on number of units (for 3000 units)
iii. Calculate the Total Cost per unit from the available information (use OAR based on cost
per unit)
iv. Which of the above absorption bases is more suitable for Raajje Fresh?
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