Assessment question task 8

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.

Best Answer

  • PeterC
    PeterC Registered, Tutor Posts: 225
    Accepted Answer
    Overhead absorption rate = overhead per labour hour
    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
    Overhead £20 (from your answer)
    Total cost per unit = 10 + 40 + 20 = £70

    Product Gee:
    Material £15
    Labour £25
    Overhead £12.50 (from your answer)
    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
    larora

Answers

  • KayLewis19
    KayLewis19 Registered Posts: 5
    @PeterC thank you so much, you're a life saver :)
  • PeterC
    PeterC Registered, Tutor Posts: 225
    You're welcome
  • larora
    larora Registered Posts: 5
    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.
  • Pian32
    Pian32 MAAT Posts: 425
    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
    AAT Level 4, MAAT
    ACCA in progress
    F4- Passed Aug 2020
    F5- Passed Dec 2020
    F6- Passed Sep 2020
    F7- Passed June 2021
    F8 - Planned Sep 2021
    F9 - Passed June 2021
    larora
  • larora
    larora Registered Posts: 5
    Many thanks
Sign In or Register to comment.

Not registered?

Register to create your free account, talk to AAT members and start your own discussions.

Privacy Policy