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.

Comments

  • PeterC
    PeterC Registered, Tutor Posts: 245 Dedicated contributor 🦉
    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
  • KayLewis19
    KayLewis19 Registered Posts: 5
    @PeterC thank you so much, you're a life saver :)
  • PeterC
    PeterC Registered, Tutor Posts: 245 Dedicated contributor 🦉
    You're welcome
  • larora
    larora Registered Posts: 7
    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 Registered Posts: 474 Dedicated contributor 🦉
    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 - Passed Sep 2021
    F9 - Passed June 2021

    SBL -
    SBR - Passed Mar 22
    ATX - Passed Dec 21
    APM - Passed June 22
  • larora
    larora Registered Posts: 7
    Many thanks
Privacy Policy