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 setups 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 setups......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 setups.........................................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
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 setups 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 setups......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 setups.........................................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

b) OAR = Total FC / Total Labour hrs
Total 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 = £47.101 
N4T,
Perfect! Thanks so much!!0 
Where can i find past papers for credit contro AQ2010?0

AQ2010? Why 2010?0

hi, how did you figure out for a) cost driver per material requisition and production set up, also materials handling and total production set up/ Can anyone help !0

Cost drivers:
Material  £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.0 
Good Morning, can someone please explain where the £250k comes from in N4T's example above? I have my exam later today and am really struggling to work this one out.
Many Thanks
0
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