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Accounting for overheads part 3 – ACCA Management Accounting (MA)

VIVA

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  2. Dear John,

    Your lecture Notes Only Mentions “The Reciprocal & Algebraic Methods”

    However, on the BPP Pass Card they’ve mentioned 2 Other Methods Known as: “The Direct Method & The Step-Down Method” (Will this Not Be Tested In The Examination?)

  5. Dear Sir,

    May I have your help with this task as well?

    A company manufactures two products, X&Y, in a factory divided into two production cost centres, Assembly and Finishing.

    The following information is available:

    Cost centre Assembly Finishing
    Allocated fixed overhead costs $144,000 $82,500
    Direct labour minutes per unit
    Product X 36 31.25
    Product Y 48 30

    Budgeted production is 6,000 units of Product X and 7,500 units of Product Y. Fixed overhead costs are to be absorbed on a direct labour hour鈥檚 basis. What is the budgeted fixed overhead cost per unit for Product Y?

    Solution is USD 18 but how to calculate it for Y?

    Thank you very much!

    • Did u make sure to divide the Direct labour minutes per unit? Because they are in minutes turn them into hrs.

      For X: 36/60= 0.6, 31.25/60= 0.5
      For Y: 48/60= 0.8, 30/60= 0.5
      and try to find labour hours for Assembly and Finishing. Check example 2 for opentuition for details.

      I got assembly hr= 9600 and finishing hr= 6750

      Then, try calculating OAR for assembly and finishing.

      OAR Assembly= 15
      OAR Finishing= 12

      Finally, calculate the fixed overhead cost per unit for Y;

      (0.8 x 15)= 12
      (0.5 x 12)= 6

      and add them together and ta-da, the answer is 18

      • Thanks for this lecture it was very informative.

        Have to say the algebraic method is much more comfortable for me.

        1. Saves time
        2. Reassuring to have a constant check with either side of the equal sign balancing

        I’m usually fairly ok with algebra but after watching your lecture I attempted the example independently and had to go back and see exactly how you isolated the ‘s’ or ‘m’ in the equation. Of course it was me lacking common sense and on second glance it clicked instantly.

        Thankyou for

  6. Dear Colleagues,

    May I have your help how to resolve to below task?

    “A product requires 5 hours of labour at 12.50 per hour and includes direct expenses of $100. If聽Absorption rates are $16.50 per direct labour hour then calculate the total cost per unit.”

    The solution is $245 but I am not able to find out how to calculate this 馃檨

    Thank you very much!
    Alexander

  17. The Acca Platinium certified collages , Kaplan , BPP , Accowtancy – They can earn money.

    But They can never earn the Love and Respect I/We have for you. Opentution is best and John Moffat is the Greatest in teaching.

    • Bro Only one method is sufficient. If every technique is presented, not only will students confuse, but precious time will be taken.
      I am a math student, so Algebraic method is super easy for me.

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