Labour, Materials, Overheads.

amylouisejuds AAT Student Posts: 4 New contributor 🐸
edited March 2020 in Elements of Costing
Please could someone help me with the below .. need help with calculations for Part B.



  • Paul67
    Paul67 Registered Posts: 7
    Apparently the direct labour cost needs to be scaled up by 1.2 (as per the answer given of £69,450) for the production of 1,200, based on the assumption, unstated in the question, that working hours would go up in line with production. I had originally assumed that working hours remained the same and that only the total bonus payments would increase by 1.2 from £500 to £600, hence my answer for the direct labour to produce 1,200 was £57,975. Manufacturing overheads remain the same.
  • Pian32
    Pian32 MAAT Posts: 474 Dedicated contributor 🌟 🐵 🌟
    So for the 1000 column you are just about there. Add together your cost to get your total and then divide by 1000 to get you per unit cost.

    For the 1,200 amount you need to look at the cost behaviour.

    For variable cost you need to scale the cost to the correct level. You do this by divding by the original number of units (1,000) and then multiplying by the wanted number of units (1,200).

    For fixed costs you don't change anything.
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