PCR - Comparing Cost of Labour Budgets calculated on June 06 with June 05

System
System Posts: 100,534 🤖 Admin 🤖
edited June 18 in AAT student discussion
Hi, Please, please can anyone just help me to understand why on June 2006 answer the cost of the labour budget hasn't shown the premium included ie. the extra £3:

Basic hours 3,500 x £6.00
Overtime 805 x £6.00

but on the June 05 paper answer the cost of the labour budget has got the premium included:

Normal hours 10,500 x £8
Overtime 1,000 x £12

and on both papers its says 'any overtime premium is charged to overheads' I just don't see the difference and why?? it's driving me insane, and I have no body to ask as have been studying it at home.

Comments

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:PCR - Comparing Cost of Labour Budgets calculated on June 06 with June 05

    Hi,

    Difference is June 2006 paper asks for Cost of DIRECT labour hours budget ie direct labours which does NOT include overtime. It is down to reading the question. (We went over this one in class)

    Hope this helps

    Good luck with your exam tomorrow.
    Jackie
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:PCR - Comparing Cost of Labour Budgets calculated on June 06 with June 05

    It depends on whether it says overtime premium is included in production ovrehead rate. Is this the case here?

    Paul.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:PCR - Comparing Cost of Labour Budgets calculated on June 06 with June 05

    Can somebody clarify something for me. I have also been doing June 2005 where it notify's you that OT premium is charged to fixed overheads.

    When you prepare you Absorption Cost of Prod'n for item g do you add the premium to you fixed overhead? Or is it just for info purposes in order that you do not include the amount for OT premium within your Labour Cost expense when preparing your Cost of Prod'n Budget.

    I'm sorry if I sound totally thick, but my brain just ceases to work at the moment.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:PCR - Comparing Cost of Labour Budgets calculated on June 06 with June 05

    Its not being thick, you wouldnt be challenging it if you were thick!
    If I understand what you are asking, then the cost of the premium is already 'included' in the OAR for production. So doesnt need adding in again.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:PCR - Comparing Cost of Labour Budgets calculated on June 06 with June 05

    Thank you so much - 80% of me thought that. The word 'fixed' would give it away. Feel such a dummy now.
    :oops:
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:PCR - Comparing Cost of Labour Budgets calculated on June 06 with June 05

    Dont be silly. Better to be sure than sorry!

    How are you with the other bits of the paper?
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:PCR - Comparing Cost of Labour Budgets calculated on June 06 with June 05

    Not too bad. Although, to be perfectly honest, I do not feel prepared at all for my exam. I had my PEV exam on Monday and section 2 was a killer - the question was so poorly written, I just could get my head round how to approach it. I could not possibly have passed!
    Now, I just seem to have lost all confidence in passing either of them. I spent most of my study time on PEV and gave only 2 days for PCR. Not good planning at all.
    Bet you wish you'd never asked! LOL.
    Oh well, guess it's just fingers crossed for an easy paper!
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:PCR - Comparing Cost of Labour Budgets calculated on June 06 with June 05

    If there is anything you need help with (it will help my revision also) pm me, or email me.

    Paul
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:PCR - Comparing Cost of Labour Budgets calculated on June 06 with June 05

    Many thanks and much appreciated! :D
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:PCR - Comparing Cost of Labour Budgets calculated on June 06 with June 05

    Hi, Thanks ever so much for the help, :D I think I've just finally clicked on that one!! Well good luck everyone with the exam tomorrow. Julia

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