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Hi
I am working through Robust Laptops and confused how they got the overhead absorption rate of 14,190,000/ (23800 x 3) = £596.22
I know the 14,190,000 is total overheads, and 23400 is total units that take 3 hours to produce but how have they got £596.22?
I got the answer correct using total costs of (60,837,000/23800) + mark up. But confused how they have done it.
Thank you
JemmaTotal fixed costs = 14,190,000
Total output = 23,80014,190,000596./23,800 = 596.22
It’s just total fixed costs spread over output.
14190/23800*3=198.7 this represent absorp rate pr labour hr. So 1 unit take 3 hrs to produce yu need to multiply 198.7 by 3.yu will get the ans
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