Help with calculations please...

System
System Posts: 100,534 🤖 Admin 🤖
edited June 18 in AAT student discussion
Hi, I am driving myself around the bend with this question I have to do. Can anyone help me please?<BR><BR>I have to calculate standard cost per unit, actual quantity of direct material used, actual number of direct labour hours, and actual amount of fixed overhead based on the following:<BR><BR>standard cost per unit includes 75g of material at £4.40 per kg, which takes 30 minutes of direct labour time at £8.00 per hr. Planned labour hours are 15000hrs per month, Fixed overheads are absorbed on direct labour hours. Budgeted fixed overheads are £270000 per month.<BR><BR>actual results were material cost £8400 at £4.20 per kg<BR>actual labour cost was £120,400, and hours worked were sufficient enough for production of 28000 units, although actual production was only 25000 units. The actual fixed overheads was in line with the budgeted amount.<BR><BR>Also, 1kg = 1000g. <BR><BR>MY CALCULATIONS<BR>My standard cost per unit is 4.40 + 8.00 + 18 (based on 270000/15000) = £30.40. Actual quantity of material used is 2000kg (£8400/£4.20), actual number of labour hours is 15050 hrs (£120400/£8.00), and total amount of overhead is £270000. <BR><BR>Can anyone help me? Thanks.

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  • System
    System Posts: 100,534 🤖 Admin 🤖
    Help with calculations please...

    Hi<BR>Standard cost of one unit could be calculated as,<BR>15000 hours worked will produce two units for each hour worked. Therefore 30000 units are planned<BR>each unit takes 75 g of material at £4.40 per kg.<BR>30000x 75g=22500 KG X 4.40=£99000/30000=£3.30 per unit<BR>Over heads are £270000 /15000=18 per hour /2=£9.00.<BR>Labour £8.00 /2=£4.00 per unit<BR><BR>Therefore standard cost is-:<BR><BR>Materials per unit £3.30 + Overheads £9.00 + labour£4.00=£16.30 per unit.<BR><BR>Actual Costs<BR><BR>Materials=8400 / 4.20=2000kg used<BR>Hours worked=28000( Hours worked sufficient to produce this amount )/2=14000 hours actually worked<BR>Over heads =14000 hours at £18 per hour =252000<BR>Think I have this right!<BR>Let me know if you disagree<BR>Karen<BR><BR>
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Help with calculations please...

    Hi Karen<BR><BR>I was going to do it the way you did it but I was a bit confused. However, my figure for the standard cost per material is now £0.33 per unit. I think this was based on 4.40/1000g * 75g. I noticed you have £3.30 per unit. Can you explain it to me please on how you do the conversion. Thanks.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Help with calculations please...

    I think you are correct. I have miscalculated the decimal points. Which means I used 750 grams instead of 75grams.<BR>But the principle is still correct<BR>Sorry! <BR>Thanks for pointing this out .

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