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Please can someone help with question b) looked at the answers but can't firgure out how overhead absorption rate was calculated. I'm completely clueless about question c) also

Thanks.

• Registered, Tutor Posts: 236
Total overheads = £240,000 + £360,000 = £600,000
Total labour hours = 60,000
Overhead per labour hour = 600,000/60,000 = £10

Part (c)

Absorption costing:
Total cost per unit = material + labour + overhead

Product Eff:
Material £10
Labour £40
Total cost per unit = 10 + 40 + 20 = £70

Product Gee:
Material £15
Labour £25
Total cost per unit = 15 + 25 + 12.50 = £52.50

Activity based costing:
Total cost per unit = material + labour + set up + material handling

Product Eff:
Material £10
Labour £40
Set up £3.20
Material handling £9.60
Total cost per unit = 10 + 40 + 3.20 + 9.60 = £62.80

Product Gee:
Material £15
Labour £25
Set up £20
Material handling £15
Total cost per unit = 15 + 25 + 20 + 15 = £75

• Registered Posts: 5
@PeterC thank you so much, you're a life saver
• Registered, Tutor Posts: 236
You're welcome
• Registered Posts: 7
Hiya

Quick question, how did you find budgeted labour hours (60,000 hours) in this question, Part b?

Everything else makes sense, but this one I couldn't work out.
• MAAT Posts: 472
Eff
Hours per unit 2 (40/20)
Budgeted Units 25,000

Gee
Hours per unit 1.25 (25/20)
Budgeted units 8,000

2*25000 + 1.25 * 8000 = 50,000 + 10,000 = 60,000
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Many thanks