Budgeting CBE & BOAR

kellylpool

Hi there,

Sat BGT today and an early question on BOAR threw me a little.

Question said that 3 different products were produced with varying machine hour time.

I recall the total overheads been £39,000.

Number of units were 13,000

I do not recall exact hours, but I remember the machine hours been higher than the labour hours so I leant towards this which produced a BOAR of £0.30. This didn't look right so I tried labour hours which gave a £2 something figure. Again, I wasn't convinced.

So I ended up going with the number of units. Which produced a BOAR of £3 per unit. I'm trying to convince myself that this makes more sense with the clue been in the question (3 different products, varying machine hour time). I'm not confident because I've only really come across BOAR where its either been machine or labour hours.

Am I right?

Kelly

kellylpool

I think my answer is wrong. I now understand that you can only use units when it relates to only 1 product. I definitely recall question mentioning 3 different products. So theres 1 wrong answer and a nail in the coffin.

What I don't get is. The machine hours were 130,000 and the labour hours were much lower at around 15,000. So obvious answer is machine hours, however, i think the question ruled that out when it said products take VARYING amount of machine hours.

So with the units taking varying amount of machine hours and there been 3 different products would that mean that the answer is that the BOAR should be based on labour hours????

Can anybody shed any light please?

Regards

Kelly