Outcome(s) covered 1 and 2Assessment task instructionsQuestion 1Jamieson Tech Ltd is a manufacturing company. The following is an extract from their budgeted information for the year after overhead costs have been apportioned to the relevant production department:DepartmentOverheadsLabour HoursMachine HoursA240,00060,000-B280,00090,00014,000 The following information relates to Overhead costs: (a) Within each department, Production Overheads are absorbed on the following basis: Department A Labour Hour RateDepartment B Machine Hour Rate (b) Administration Overheads are 10% of Prime Cost (c) Selling and Distribution Overheads are 10% of Production Cost The company has received an order for a job reference number: 35/TGB. Specific details are as follows: (i) The job will require two types of Direct Materials Material V and Material Z as follows: 100 kg of Material V 8/kg 80 kg of Material Z 12/kg (ii) The job will require the following Direct Labour: Department A 100 hours 6.00 per hour DepartmentB 110 hours 4.00 per hour(iii) In Department B, the order will require 80 hours machine time (iv) For this specific job, the company will have to hire a special machine the cost of this hire is 400 (v) The company requires a profit margin of 20% on this job You are required to: Prepare an Operating Statement for the job, using the above information, showing clearly Total Cost, Profit and Selling Price.Question 2Jamieson Tech Ltd also manufacture Product ref CPO. Again, the production process for this product utilises Departments A and B. The Operating Statement below outlines the expected costs, profit and selling price of one unit of this product.Jamieson Tech LtdOperating Statement for one unit of Product CPO:Direct Materials 80 kg of Material T8/kg640 30 kg of Material Y10kg300 940Direct Labour Department A 60 hrs6/hr360 Department B 80 hrs4/hr320 680Prime Cost 1620Production Overheads Department A240 Department B400 640 2260Administration162 Selling and Distribution226 388Total Cost 2648Profit 662Selling Price 3310 A large and important customer, Ceesay plc, has approached Jamieson Tech Ltd and offered them 304,000 for 100 units of product CPO.The management of Jamieson Tech Ltd is considering this special order, especially as tightening market conditions mean that the future selling price of CPO is expected to fall by 10%. However, in order to meet the tight deadlines for this special order they would need to reorganise their usual production processes, in particular to access the extra labour required in Department A. They are therefore considering the following options: (a) Reject Ceesays offer assuming the expected fall in selling price. (b) Accept the special order, but make up the labour required by temporarily closing Department C (which makes product TUC) and transferring employees from Department C to Department A. This will result in a lost contribution of 10,000 from ceasing to make and sell product TUC. In addition, the temporary closure of Department C will result in its share of Fixed Overheads being re-allocated to the other departments. This will increase the Departmental Overhead Absorption Rates and will mean that, for this special order, Department A will incur additional Fixed Overheads of 2,000 and Department B will incur additional Fixed Overheads of 1,000. (c) Accept the special order, but utilise overtime in Department A in order to meet the requirements of this job (this would avoid the need to close Department C). This would mean that the direct labour for this order in Department A would be charged at time-and-a-half. In addition, if the company went ahead with options (b) or (c) above, and accepted the special order from Ceesay, their direct material suppliers would give them an additional trade discount of 20%.You are required to: (i) Produce a Marginal Cost Statement, using the above information, analysing the three alternative courses of action. The statement should show clearly the effect of changing costs/and or revenue levels on Contribution and Profit. Assume all Overhead Costs are Fixed Costs. (ii) Produce a short report to the management of Jamieson Tech Ltd, in which you recommend and justify an appropriate course of action.Assessment task 1Outcome(s) covered 1 and 2Suggested solution and making an assessment decisionThe standard required for a pass should be based on the principal criteria:Does the candidate demons