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Hello,
I took your advice and I started to read the e-book of F2 lecture notes.
I have one question to trouble with:
A company manufactures 2 products L, M:
Allocated and apportioned x y
fixed overhead cost 88000 96000
Direct labour hours per unit:
L 3.0 1.0
M 2.5 2.0
Budgeted output is 8000 units of each product. Fixed overheads are absorbed on a direct labour hour basis.What is the budgeted fixed overhead cost per unit for production M?
10
11
12
13How do we get $13 per unit?
Thank you in advance!
I am pleased that you are reading the Lecture Notes, although I hope that you are watching the free lectures that go with them. As is printed on the second page of the Lecture Notes, there is no point in using the notes without watching the lectures – they are lecture notes, and it is in the lectures that we explain and expand on the notes.
For this question you need to first calculate the overheads per hour for each department separately. So, for example, for department X, the cost per hour is 88,000 / ((8,000 x 3) + 8,000 x 2.5)) = $2 per hour.
Similarly for department Y.Then you can calculate the cost per unit for M. It is (2.5 hours at $2 per hour) plus (2 hours at the cost per hour for department Y)
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