Nataliedory AAT Student Posts: 26
TASK 8B please @dumutroba the fixed overheads


  • dumutroba
    dumutroba AAT Student, AATQB Posts: 264
    edited January 2019
    Hi Nat,

    the key for this task is that the fixed overheads are absorbed on BUDGETED LABOUR HOURS, be careful because it could be machine hours or units on the exam
    As it is labour hours we have to scroll up and see how much labour hours each unit is using
    Rose 3h and Thyme 2h per unit
    Therefore 50000unitsx3h=150000h are budgeted for Rose
    25000unitsx2h=50000h are budgeted for Thyme

    We use this data to calculate the OAR=£400000+£600000/150000h+50000h=£5

    SO for every labour hour we absorb £5 fixed overheads, therefore

    Rose 150000hx£5=£750000
    Thyme 50000hx£5=£250000

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  • Nataliedory
    Nataliedory AAT Student Posts: 26
    Thank you so much!! @dumutroba
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