Home For AAT student members AQ 2016 Professional Diploma in Accounting Management Accounting: Budgeting

Sample Assessment 1 - Task 1.5 (b)


I am struggling to find the answer to "variable production overhead" in this question. I understand that it is worked out of the total labour hours but am unable to find the unit price??

Best Answer

  • GMS1992GMS1992 Registered Posts: 27
    Accepted Answer
    The variable overhead relates to labour hours.
    You have to work out the amount of labour hours from annual data 246,000 units x 10 mins = 2,460,000/ 60 to make it in hours = 41,000 hours of labour time annually.
    Annual variable overhead £95,940 / 41,000 hours = 2.34 per hour Overhead rate.
    21,000 units x 10 mins = 210,000 / 60 to make it hours = 3500 hours in April * £2.34 per hour = £8,190 Overheads for April.
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