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# Management Accounting Decision and Control Sample assessment 1 task 1.9 part B + C

Loopster
Registered Posts:

**24**
Hi,

I am a bit stuck on task 1.9 part B and C. I am fine with part A. If anybody could help I would be most grateful!

Herb Ltd manufactures 2 products, Rose and Thyme. The 2 overhead activities production set-ups and materials handling, have budgets of £600,000 and £400,000 respectively.

Rose and Thyme use 3 hours and 2 hours of labour per unit respectively.

....................................................Rose......................Thyme

Direct Materials - £ per unit.........2.10.......................3.33

Direct Labour - £ per unit.....,,,,......30..........................20

Number of material requisitions....400.......................1200

Number of production set-ups......150.........................50

Budgeted production units...........50000...................25000

a) Complete the table below using ABC Principles

Rose(£)......................Thyme(£)

Cost driver - Per material Requisition............250

Cost driver - Per production set - up............1000

Total Materials Handling..........................................100,000.....................300,000

Total production set-ups.........................................150,000......................450,00

b) Calculate the fixed overheads assuming they are absorbed on a labour hours basis

Answers (ROSE £750,000, THYME £250,000)

c) Using information from (a) and (b) calculate the total cost per unit using ABC and the traditional method to two decimal places

......................................................Rose (£)...................Thyme(£)

Total Unit Cost - ABC.....................37.10.........................53.33

Total Unit Cost - Labour Hours......47.10..........................33.33

Any help will be great!!

Thanks

I am a bit stuck on task 1.9 part B and C. I am fine with part A. If anybody could help I would be most grateful!

Herb Ltd manufactures 2 products, Rose and Thyme. The 2 overhead activities production set-ups and materials handling, have budgets of £600,000 and £400,000 respectively.

Rose and Thyme use 3 hours and 2 hours of labour per unit respectively.

....................................................Rose......................Thyme

Direct Materials - £ per unit.........2.10.......................3.33

Direct Labour - £ per unit.....,,,,......30..........................20

Number of material requisitions....400.......................1200

Number of production set-ups......150.........................50

Budgeted production units...........50000...................25000

a) Complete the table below using ABC Principles

Rose(£)......................Thyme(£)

Cost driver - Per material Requisition............250

Cost driver - Per production set - up............1000

Total Materials Handling..........................................100,000.....................300,000

Total production set-ups.........................................150,000......................450,00

**I am fine with this part**b) Calculate the fixed overheads assuming they are absorbed on a labour hours basis

Answers (ROSE £750,000, THYME £250,000)

**I can't seem to work out how to get to these answers**c) Using information from (a) and (b) calculate the total cost per unit using ABC and the traditional method to two decimal places

......................................................Rose (£)...................Thyme(£)

Total Unit Cost - ABC.....................37.10.........................53.33

Total Unit Cost - Labour Hours......47.10..........................33.33

**I can't seem to work out how to get to these answers either, probably because I can't do part B**Any help will be great!!

Thanks

0

## Comments

191Total FC = £600K + £400K = £1,000,000

Total Labour hrs = 200,000 hrs

Rose - 3hrs per unit x 50,000 units = 150,000hrs

Thyme - 2 hrs per unit x 25,000 units = 50,000 hrs

Fixed costs is absorbed at rate of £1,000,000 / 200,000 hrs = £5 per labour hr

Fixed cost for Rose 150,000hrs x £5 = £750,000

Fixed cost for Thyme 50,000hrs x £5 = £250,000

c) I'll just show the workings for Rose

ABC method

VC 30.00 + 2.10 = £32.10

FC £250K /50,000 units = £5.00

Total unit cost = £37.10

Traditional method

VC £32.10

FC £750K/50,000 units = £15

Total unit cost = £47.10

24Perfect! Thanks so much!!

542423140Material - £400,000 (fixed ohd) / 1,500 (total requisitions)

Set ups - £600,000 / 600 (total set ups)

Then apportion them out - rose has 400 requisitions to Thyme's 1200 so ratio 1:3

400,000 / 4 so Rose £100k thyme £300k. Then the same method for set ups.

Hope this helps.

5Many Thanks