[chacki]

How is the machine set up costs calculated in part a?
The working says machine set – up costs for K is (26k – 4K) * 500/400.

I don’t understand why it is multiplied by 500 then divided by 400 and not multiplied by 400 / 500

Please could you help me understand this?

[chacki]

This question is from the ACCA Practice Test Papers

Sorry, so if I understand correctly the correct working out is: (4000+200-300)/1000. So the answer is 3.9. Is that correct?

[chacki]

Sorry there was a typo. The solution said (4000-200+300)/1000. But I don’t understand why.

I thought actual cost was 4000 so we had to work backwards using the variance to calculate the standard direct material cost per unit i.e. (4000+200-300)/1000?

[Author]

Posts