Variable mariginal cost and full absorption c- a huge confusing!

I have been pactice the past exam papers. Once i learnt the technique in June 2008 in task 1.6.

b) Variable (marginal) cost

Prime cost £57,076
Variable overheads £48,064
Variable cost £105,140

Divided by number
of batches 15,020

Variable cost/batch £7.00

So now i know how to find the variable costing from June 2008 and do June 2005 but the answer is completed WRONG even i use the same formula, a look at June 2005 exam paper in task 1.6 so i calculated it exactly the same way as JUNE 2008 i am very angry and confuse that AAT examiners are trying to tricky and try to make us fail .

Here is what i workout the answer.

b) Variable (marginal) cost

Prime cost 27
Variable overheads 80,000
Variable cost 80,027

Divided by number
of batches 10,000

Variable cost/batch £10.00

Here is the correct answer from AAT past paper more confuse, so which one i should follow for DEC 2008 without to fail my exam just because AAT examiners are trying to make my exam harder.

Direct materials 316.80
Direct labour 412.50
Variable overheads
£197,800 / 230 batches 860.00
Total variable cost per batch 1,589.30

Now can you see what i mean between 2 complete huge different answer even i use June 2008 formula then do it in June 2006 and my answer is incorrect. please explain to me.:confused1:


  • Richard
    Richard Registered Posts: 373
    If you read the information provided on the 05 and 06 paper you will see that the Direct Material and Direct Labour figures provided are Per Unit, and not the total as in the June 08 paper. Therefore, to calculate your answer you do not need to divide these amounts by the batch total to find the cost per unit.

    To use the June 05 as an example you are given the following information:

    Direct materials per unit £10.60
    Direct labour per unit £16.40
    Total variable overheads £60,000
    Total fixed overheads £80,000
    Number of units produced 10,000

    Therefore, to find the variable cost per unit you need to divide the total variable overheads (£60,000) by number of units produced (10,000) and add this to the Direct materials/labour per unit.

    £10.60 + £16.40 + £6 = £33
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