Home For AAT student members AQ 2013 AAT Level 4 (Level 8 in Scotland)

operating budget again

manbomanbo ManchesterRegistered Posts: 6
sorry guys but i have another one as well


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


  • PeterCPeterC Registered, Tutor Posts: 196
    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

    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
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