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How can you ditermine number of units given Absoption rate based on Direct labour hours. Production overheads given as well as cost of direct materials.
If the absorption rate is based on labour hours, then you do not necessarily need to know the number of units produced. You need the budgeted overheads and the budgeted hours.
I cannot say more than that unless you refer to a specific question that is causing you problems.
Have you watched my free lectures on this? The lectures are a complete free course for Paper F2 and cover everything needed to be able to pass the exam well.
In RAFA (U) Ltd, their product passes through two processes of melting
and fabrication. A normal loss of 2% is allowed in melting and 5% in
fabrication. The disposal of scrap fetches Shs. 1,500 per unit. There were
800 units of finished product at the end of July 2002. During August 2002,
20,000 units of materials costing Shs. 8,000 per unit were introduced into
the melting process. Below are other costs:
Melting Process Fabrication Process
Shs Shs
Labour 10,000,000 6,000,000
Materials – 7,000,000
Overheads 4,000,000 4,000,000
Output from the Melting Process were 19,200 units; 19,000 units were
produced by Fabrication which were warehoused.
Required:
Prepare the Process Accounts.No – I will not prepare the process accounts!
This forum is not for you to set test questions and expect a full answer.
You must have an answer in the same book in which you found the question, and so you should say what it is in the answer that you are not clear about – then I will help you.
In addition, this question could not possibly be asked in Paper F2. Although you will certainly be tested on process accounts, you cannot ever be asked to prepare a process account in the exam – the format of the exam just does not allow it to be asked.
Have you watched my free lectures on this? I guess not, and I therefore suggest that you do. The lectures are a complete free course for Paper F2 and cover everything needed to be able to pass the exam well.
In future, please start a new thread if you are asking about a different topic. Your question has nothing at all to do with overheads!!
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