Forums › ACCA Forums › ACCA MA Management Accounting Forums › Absorption and marginal costing principles
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- May 13, 2012 at 8:28 am #52640
Hey I’m Russ, going insane.
I have Total production costs (direct materials, direct labour, variable production costs and fixed production costs) of 80,000. The direct materials are 20,000, direct labour 50,000, variable overheads 10,000 and fixed overheads 10,000. (This is at 140% capacity)
I’ve searched for different ways but the internet varies so widely that finding a definitive guide is difficult. I worked out the direct labour overhead absorption rate, the direct materials absorption rate and the prime cost overhead absorption rate.
Also since I dont have the number of units I also divided the costs by 100 to get the cost of each area. So, instead of £?? per unit its £?? per 1% of capacity, I’m not sure if that helps or not but I saw it somewhere.
How would I work out the additional costs of working an additional 10% through at outsourcing company (if I’m currently working at 140%) by using marginal and absorption costing principles?
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