operating budget again

manbo

sorry guys but i have another one as well

http://osbornebooks.rtahosting.co.uk/osborne69/q11s.asp

the link is the one above. On the basis on what calculation is the labour and variable production overhead calculated? please help with this too. thanks

PeterC

Because variable overheads vary with the number of hours worked, they also vary with the number of units made

Look at the budget for the year
Variable overhead is £20,000 for 100,000 units produced, so £0.20 per unit

In May, the budget is for 8,000 units produced, so variable overhead is £0.20 x 8,00
ie £1,600


Labour:
In May, 8,000 units take 1,200 hours (8,000 x 9mins/60)

1,100 hours are paid at basic rate £14/hr 1,100 x 14 = £15,400
100 hours overtime 100 x 14 x 150% = £ 2,100
Total £17,500