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See BPP exam kits the question of sniff linited (12/07), see its answers the answer of part b.:
Why it has not added the cost of supervisors and fixed overheads ?
see where it has calculated the incremental cost why it has not included the supervisory; in the question it is said that the supervisor has to spend 10% of his working time, so it should be included, why it has not?
PLEASE REPLY, thanks in advanceThe supervisor is already working, this 10% would be taken from the time that he is already serving as a supervisor for other processes. It means that for the process he is already working at, he would be giving his 90% of time and for this process he’d give his 10% of time for which he is already getting an annual salary of 35000, means it wouldn’t matter whether he supervise this new process or not, he would get 35000 at any cost. Hence no incremental cost.
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