Home For AAT student members AQ 2016 Foundation Certificate in accounting Elements of Costing
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Practice exam 2 - task 5; can someone explain?

I got the first part of the question correct when working out the absorption rates as follows:
machine hr £12
labour hr £6
unit £4

So why, then, does part (b) of the answer give the overhead absorption rates as:
machine hr £2
labour hr £3
unit £4

????

Comments

  • Pian32Pian32 Registered Posts: 144
    So each machine hour absorbs £12 but each unit only takes 10mins of machine time so only absorbs 12/6 = £2. Same for labour 30 mins so 6/2=£3
    AAT Level 4, MAAT
  • Tabitha005Tabitha005 Registered Posts: 9
    Thank you for responding. Stupidly, I hadn't fully read the question - that'll teach me!
  • stefaniastefania Registered Posts: 6
    Can someone explain please how do you get £18.50 on direct cost?! I need to find a logical way to understand it!!! Thanks
  • Pian32Pian32 Registered Posts: 144
    Hi Stefania

    I can't see the full question only what was above. Direct costs are things that are directly required for the product. So materials, labour etc the rent and heating would be indirect as they are paid independant of the product produced.
    AAT Level 4, MAAT
  • stefaniastefania Registered Posts: 6
    Hi,
    I hope the picture attached is clear enough.
    Thank you!!!
  • stefaniastefania Registered Posts: 6
    Hi,
    I hope the picture attached is clear enough.
    Thank you!!!
  • stefaniastefania Registered Posts: 6
    For s> @Pian32 said:
    > Hi Stefania
    >
    > I can't see the full question only what was above. Direct costs are things that are directly required for the product. So materials, labour etc the rent and heating would be indirect as they are paid independant of the product produced.

    For some reason it doesn't let me attach a picture. Is there any other way I can send it to you?!
  • stefaniastefania Registered Posts: 6
    For s> @Pian32 said:
    > Hi Stefania
    >
    > I can't see the full question only what was above. Direct costs are things that are directly required for the product. So materials, labour etc the rent and heating would be indirect as they are paid independant of the product produced.

    For some reason it doesn't let me attach a picture. Is there any other way I can send it to you?!
  • stefaniastefania Registered Posts: 6
    For s> @Pian32 said:
    > Hi Stefania
    >
    > I can't see the full question only what was above. Direct costs are things that are directly required for the product. So materials, labour etc the rent and heating would be indirect as they are paid independant of the product produced.

    For some reason it doesn't let me attach a picture. Is there any other way I can send it to you?!
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