Ecr

Cath Barrett

oops

Ged

Cath, I think possibly there was a mistake. The figures were something like:
Direct Materials per batch £14,500ish
Direct Labour per batch £43,000ish
Total Var. Overheads £45,000ish

Total batches to be made 15,000ish

If you took the direct costs as were given per batch then divided the Variable cost by the 15,000 batches you got an answer something like:
Prime Cost = £57,500 per batch
Variable Overheads= £48,000/15,000 = £3.20 per batch.

wilboss

Ged wrote: »

Cath, I think possibly there was a mistake. The figures were something like:
Direct Materials per batch £14,500ish
Direct Labour per batch £43,000ish
Total Var. Overheads £45,000ish

Total batches to be made 15,000ish

If you took the direct costs as were given per batch then divided the Variable cost by the 15,000 batches you got an answer something like:
Prime Cost = £57,500 per batch
Variable Overheads= £48,000/15,000 = £3.20 per batch.

That's what I got for variable overheads, but the prime cost needed to be divided by the number of batches to get a sensible answer - I'm pretty certain the 'per batch' comment in the initial figures was put there in error. As an aside I also worked out the prime cost using those figures 'per batch' as read and got a total prime cost figure of about £875,000,000 for the month which was clearly wrong! I passed this on to our exam office so hopefully it got reported back to AAT...