The assignment is about overheads (although both direct and indirect costs have to be shown in the computations) and the issue of accuracy of costs and draws on knowledge  from activity based costing.

The Cylinder Manufacturing Company.

The Cylinder manufacturing company is a large producer of oil tanks and is located in the North of Buckinghamshire in the United Kingdom. It was started as a company in 1970 and has enjoyed steady growth in both sales and profits.

Questions:

1. Analyse the problem and give advice as to the advantages of switching to machine hours as an overhead recovery base.

2. Show how an activity based system would change the analysis of the costs between the standard and specialist products.

3. Advise on the implementation of an ABC system. How can Davina's fears be lessened?

Content

Your report should, as a minimum, consider the following areas from both a theoretical and practical perspective:

• Your assessment of current costing and pricing practices of The Cylinder Manufacturing Ltd;
• Your assessment of whether activity based costing is suitable for The Cylinder Manufacturing Ltd;
• Your assessment of the factors that the management team at The Cylinder Manufacturing Ltd should consider to ensure successful implementation of activity based costing, should they decide to go ahead with Davina's proposal for change.

General guidance on what will earn high marks (and what will not)

High marks will be earned when

• The report focuses on The Cylinder Manufacturing Ltd
• The report is well structured
• The report is comprehensive
• The report is well argued
• The arguments are based on credible sources
• The report is professionally presented
• The report cites credible sources (references) in a way that allows readers to check those sources for themselves

Attachment:- Assignment Files.rar