# Osbourne pratice exam - Activity Based Costing

jodyewhite
AAT Student Posts:

**35**
Hi Anyone

I am struggling to remember how to work out ABC and how they come to the answer. I have enclosed the question.

Many Thanks

I am struggling to remember how to work out ABC and how they come to the answer. I have enclosed the question.

Many Thanks

## Comments

86First you need to calculate the OAR, which is 5.5mil/275000= £20

a) Cost driver per m.r is 3.5million/875=4000

Cost driver per set-up is 2million/250=8000

Total material handling cost, Alpha - £700,000.00 and Delta - £2,800,000.00 which adds upto 3.5mil

Totalprod set-up cost, Alpha - £400,000.00 and £1,600,000.00 which adds upto 2mil

b) Budgeted labour hours = 275000 (2x87500+1x100000)

Total Over head Absorbed, Alpha - £3,500,000.00 (20x2x87500) and Delta - £2,000,000.00

c) ABC, Alpha - £49 & Delta - £69

Absorption costing, Alpha - £76 & Delta - £45

Hope thats right.... haha

35Many Thanks that's the right answers.

b) Alpha has £40 and Delta £20 overheads per unit, how do they come to this.

c) How do you come to the answer.

Many Thanks

JO

86c) ABC Alpha 1,100,000.00/87500=13 then plus 6+30 = 49

Absorption costing Alpha 6+30+40(3.5mil/87500)=76. Absorption includes fixed costs.

358641thank you