operating budget again

manbomanbo ManchesterPosts: 6Registered
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

Comments

  • PeterCPeterC Posts: 95Registered, Tutor
    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
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