PCR June 05

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kap
kap Registered Posts: 3 New contributor 🐸
in AAT Level 4 (Level 8 in Scotland)
Can anyone help on task 1.0 e)
I thought that if you have overtime premium and it says you should charge this to the overheads and not to labour the answer should be 10.500x8=84000, overtime 1000x8=8000 not 12000 and the £4000 would go to overheads.
would anyone help?
thanks

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  • Tracie
    Tracie Registered Posts: 25 Regular contributor ⭐
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    kap wrote: »
    Can anyone help on task 1.0 e)
    I thought that if you have overtime premium and it says you should charge this to the overheads and not to labour the answer should be 10.500x8=84000, overtime 1000x8=8000 not 12000 and the £4000 would go to overheads.
    would anyone help?
    thanks
    11,500 hours is the total hours required for production:

    therefore 11,500 hrs x £8 £92,000 (this is cost of direct labour)
    1000 hrs x £4 4,000 (this is premium)

    Could also do it as 10500 x £8 = £84,000
    1000x £12= £12,000

    both will get the same answer but only the £92,000 whole of hours required for production at basic rate will get charged to direct labour.

    This is why i got confused in the June 2008 paper because the production jours were less than total hours and i only charged hours required for prodction to direct labour. I suppose it makes sense that even if they do not have to work the hours to produce goods we still have to pay them but got confused. Still confusded i think?
  • kap
    kap Registered Posts: 3 New contributor 🐸
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    Thank you so much for the explanation, it is clear now. I have looked at other papers as well to confirm.
    thanks again.
  • tezza.b
    tezza.b Registered Posts: 14 New contributor 🐸
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    I am also confused about the operating statement at the end of section 1.1
    Why have they done it with cost of production at the top and the + opening stock - closing stock and turnover etc??
    As in all other exam papers, when asked to do the operating statement, it has always been sales volume at the top and turnover - expenses to give profit :confused1:
  • kap
    kap Registered Posts: 3 New contributor 🐸
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    Cost of labour budget ) )
    Normal hours ) (10,500 ¥ £8) £84,000)
    Overtime ) (1,000 ¥ £12) £12,000)
    £96,000
    this is the answer they give us.
    Sorry I am drilling on this. I still don't understand why the charged £4000 to labour budget and not to overheads (this is the premium).

    In terms of the operating profit I think it is stil the same whatever way you put it as long as you have the same answer although I thought the layout is important!!!

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