# Activity Based Question

jlambo21
Posts:

**2**Registered, AAT StudentHello

If anyone can help me with the workings for this please ill be grateful.

Thank you

jlambo21
Posts: **2**Registered, AAT Student

Hello

If anyone can help me with the workings for this please ill be grateful.

Thank you

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## Comments

99RegisteredWith a little search, please see above

107Registered, MAAT, AATQB, AAT Licensed AccountantDo the basics first (note that they have reversed these in the table, putting materials first).

Cost driver per production set up is £2,000,000 / 250 (50 + 200) = £8,000

Cost driver per material requisition is £3,500,000 / 875 (175 + 700) = £4,000

Therefore, the total materials handling will be:

Alpha - £4,000 x 175 requisitions = £700,000

Delta - £4,000 x 700 requisitions = £2,800,000

Production set up will be:

Alpha - £8,000 x 50 set ups = £400,000

Delta - £8,000 x 200 set ups = £1,600,000

For b) you are told that it takes Alpha 2 labour hours to complete each unit and Delta uses 1 hour.

For Alpha it will be 2 x 87,500 = 175,000 hours

For Thyme it will be 1 x 100,000 = 100,000 hours

Total is 275,000 hours

Then, work out the hourly rate. So that would be £2,000,000 + £3,500,000 / 275,000 = £20 per hour

Therefore, for Alpha, the calculation will be 200,000 x £20 = £4,000,000

And for Delta, the calculation will be 1,600,000 x £20 = £32,000,000

Total = £36,000,000

107Registered, MAAT, AATQB, AAT Licensed AccountantTherefore, for Alpha, the calculation will be 400,000 x £20 = £8,000,000

And for Delta, the calculation will be 1,600,000 x £20 = £32,000,000

Total = £40,000,000

2Registered, AAT Student