• Avatar of johnmoffat says

      I subtracted the same figure from both sides of the equation.

      Its a bit difficult to be able to say more here. All I can suggest is that you either watch the lecture again, or work through the answer at the back of the course notes.

      • Avatar of johnmoffat says

        I make it clear in the lecture that you can do it either way – they will both give the same answer. Do it whichever way you find easiest and quickest.

        For the 0.97S, I subtract 0.03S from both sides. (S – 0.03S = 0.97S)

        (Remember that the answers are also at the end of the Course Notes)

    • Avatar of johnmoffat says

      The total overheads for centre X are $88,000.
      The total hours worked in X are (8,000 x 3.0) + (8,000 x 2.5) = 44,000 hours.
      So the absorption rate for X is 88,000/44,000 = $2 per hour.
      You can do the same for Y and calculate the absorption rate for centre Y per hour.

      To get the cost per unit of M, it is 2.5 hours at $2 per hour, plus 2.0 hours at the absorption rate for centre Y.


      Since labour is paid $8 per hour, they are working 400/8 = 50 hours.

      So the total cost is the total of materials (300), plus the labour (400) plus production overheads (50 hours at $26 per hour) plus non-production overheads (120% x (300 + 400)).

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