# Applied Management Accounting, work book

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Question 2.1

• Registered Posts: 89 Regular contributor ⭐
Hi @emanneh

I hope you are well?

Sales: Budget for the year £540,000 / Units sold 36,000 = £15 per unit. So for April it would be 3,000 Units x £15 = £45,000

Material Used - You have been told each unit requires 1.5kg costing £1.80 per kg. So you have been told that you have produced 3,500 units. Now to work out the kg used. 3,500 units x 1.5kg per unit = 5,250kg of materials used. Now to work out cost - 5,250kg x £1.80 = £9,450

Labour - You have been told each unit takes 15 minutes. We have produced 3,500 units. So to work out the time it would be 3,500 units x 15 mins = 52,500 minutes. Now we need to convert this into hours. So you would do the following - 52,500 mins / 60 mins (to convert to hours) = 875 Hours in total. You have been told basic hours avaliable in April is 800 hours. This means that 75 hours must be overtime hours. So to work out the basic hours it will be 800 hours x £12 basic rate (provided in your question) = £9,600. Overtime hours will be - 75 hours x £18 (£12 basic + 50% more than basic (£6)) = £1,350. Now add up the £9,600 + £1,350 = £10,950 is the labour cost in April

Variable Production Overhead - Relates to the labour hours worked including overtime. So for the year you have been told £20,000 for the variable production overhead and the labour for the year is £122,400 and labour for the month we worked out previous as £10,950. So to work out labour overhead for April it will be (£20,000 / £122,400) x £10,950 = £1789.21 (to 2 decimal places) or £1,789 (rounded to whole pound)

Fixed Production Overhead - Evenly spread throughout the year - So this would be - £18,000 / 12 months = £1,500 for April

I hope this helps you out. If anything is wrong do feel free to let me know I can look into it.

Many thanks

Shamil
• Registered Posts: 14 New contributor 🐸
Yes during my preparation for the ACCA exam, I have solved a question using similar methods.
• Registered Posts: 89 Regular contributor ⭐