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    • Avatar of johnmoffat says

      @denzyboo, The total hours in X are (8000 x 3.0) + (8000 x 2.5) = 44.000.
      The total overhead in X is $88000, so overheads per hour are $2.

      If you do the same for Y, there are 24,000 hours and so the overheads per hour are $96,000 / 24,000 = $4.

      Product M used 2.5 hours of X (at $2 per hour) and 2.0 hours of Y (at $4 per hour).
      So total for a unit of M is (2.5 x $2) + (2.0 x $4) = $13.

    • Avatar of johnmoffat says

      @hixam, Materials and labour total $700 and so the prime cost is $700. Non-production overheads are absorbed at 120% of prime cost which is 120% x 700 = $840.

      Because the total labour cost is 400 and labour is paid 8 per hour, it means the the number of labour hours is 400/8 = 50. Production overheads are absorbed at $26 per labour hour and so the total production overheads are 50 x 26 = $1300.

      So….total cost is: Materials 300 + Labour 400 + production overheads 1300 + non-production overheads 840 = $2840

  1. avatar says

    hellow idil. well let me try my best to make it easier, 0.03S when you take it to other side of the equation it will be -0.03S (it will take minus sign). therefore deduct this from S ( dont forget that S is associated with number 1, so it is 1S). the equation will be like this S – 0.03= 0.97S.
    I hope you understand it.

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