Unit 6 OAR?

System

Please can i just double check to see if i have done this right?<BR>I am doing some extra work for unit 6 and quite stuck on a question.<BR>i need to calculate the unit cost for each production (4 in all) if all overheads costs are absorbed on a machine hour basis.<BR>I give you an example for 1 product<BR>Output in units - 120<BR>Cost per unit<BR>Direct Materials - £40<BR>Direct Labour - £28<BR> 4 Machine hours per unit.<BR><BR>I divided direct materials & labour by 4 (Number of machine hours per unit)<BR>and i do that for each other products.<BR>Then my total production overhead per period is £26000.<BR>Do i add up the number of Machine hours per unit for all 4 products and divide by the total figure<BR>Ie 26000 / 12 (total machine hrs) x 4HRS (Total for the above product)???<BR>x

System

Unit 6 OAR?

You need to work out the total time per product line will take, then percentage of direct machine hours per product to pro rata your overheads : eg<BR><BR><BR>unit a 10,000 hours 20%<BR>unit b 12,000 hours 24%<BR>unit c 15,000 hours 30%<BR>unit d 13,000 hours 26%<BR>total 50,000 hours 100%<BR><BR>This is by means of distibuting the overheads fairly over the total number of machine hours taken by each product. Once you have worked out the overheads per product then you can work out the overhead absorption per product.<BR><BR>This is providing I have understood your question right, if not give me your e mail address and I will try and help further<BR><BR><BR>