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?

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;

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

Thanks for teaching me algebraic, i struggled for a while. I passed my FA Exam with a pass of 85%, im in the process of writing the MA examThanks your contributions.

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.

Patrickizzo says

Sir, would there be a problem if I am 1 or 2 off and getting $90283 & $44717 or $90285 & $44715, Using the Repeated Distribution Method?

Cawa says

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!

PPT4321 says

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

PPT4321 says

sry, check example 3 xD

John Moffat says

In future you must ask questions like this in the Ask the Tutor Forum, and not as a comment on a lecture.

Cawa says

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

John Moffat says

Labour is 5 hours at $12.50 = $62.50.

Overheads are 5 hours at $16.50 = $82.50.

Direct expense are $100.

100 + 62.50 + 82.50 = $245

Cawa says

Thank you very much! It is so simple.

What does mean – A product requires 5 hours of labour at 12.50 per hour? I do not understand this part of the sentence.

John Moffat says

It means that it takes the worker 5 hours to make the product and the worker is paid $12.50 per hour.

mwcassim786@gmail.com says

Thanks for teaching me algebraic, i struggled for a while. I passed my FA Exam with a pass of 85%, im in the process of writing the MA examThanks your contributions.

John Moffat says

Congratulations – that is great news 馃檪

jvowles says

On algebraic method, why do we do 1 minus 0.03s- where does the 1 come into it?

John Moffat says

This is basic algebra.

If you subtract 0.03S from both sides, then 1S – 0.97S = 0.03S

sintayehubirkneh says

Thanks for the lectures

John Moffat says

You are welcome 馃檪

Raheesa says

Can I know how u got 0.97s?

huldaya says

Thanks alot sir i had some issues with the algebraic method but with the lectures i understand it perfectly well now

John Moffat says

Great 馃檪

AjayAnton says

Added 15,000 + 4,000 = 19,000.00

Ignore me. Thanks for this lecture!

AjayAnton says

Why didn’t you recharge the 4,000 in the first line?

SarahHaytasingh says

I want to know as well!!!

John Moffat says

I did!!

As AjayAnton has himself written above, I added the 4,000 to the 15,000 and recharged the 19,000.

Asif110 says

Greatly Appreciate this Lecture !

foziljonkh says

Thank you very much:)

John Moffat says

Thank you for your comment 馃檪

DhirajACCA says

Mr Moffat , Great Lecture , thank you !

John Moffat says

Thank you for your comment 馃檪

lokeshdh00 says

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.

ha12 says

there is 4 method of reapportion the overheads of service dept but you did only two: step down method and algebric method. where is other two methods?

lokeshdh00 says

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.