absorption task i think!!!

valentino46

JOB XYZ123:

ive been set a task that includes the following:

direct mat 55.5 units@ 286 per unit
direct wages department A-60 hours @13 p/h
department B-80 @ 12p/h

variable overheads:
department A - £24000 for 36000 direct labour hours
department B - £40000 for 50000 direct labour hours


fixed overheads:
total budgeted direct labour hours for whole fctory 90000
total budgeted expenditure £67500

Im unsure what to do with the labour hours part and what to include in calculating the cost of the job.

any pointers would be a great help

cheers guys

SandyHood

Find the overhead absorption rates, then multiply them by the labour hours needed for the product.

1. variable overheads:
   department A - £24000 for 36000 direct labour hours so divide the £24,000 by the 36,000 DLHs
   
2. department B - £40000 for 50000 direct labour hours (equivalent calc)
   
3. fixed overheads:
   total budgeted direct labour hours for whole fctory 90000 total budgeted expenditure (same sort of thing)£67500
   
   

Now multiply

1. department A-60 hours x OAR
2. department B-80 x OAR
3. whole fctory (60+80) hrs x OAR

Is that enough to help without taking away the satisfaction you get from working out the answer?

valentino46

cheers sandy, thats great, i emailed tutor today with overhead absorption calcs that i had a bash at last night and have worked out the dep a and dep b but didnt do the total budget figures correctly.

Im finding ECR a lot more intense than FRA and more enjoyable as the calcs seem to be more intense.. have you done a blog on OAR?

rob