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A COMPANY produces 2 products – P and Q- that aare both worked in 2 departments 1 and 2.
Each unit of P spends 1 hr in department 1, and 2 hrs in dep 2.
The total production overheads are $ 50000 for dep 1 and $90000 for dep 2.what is the cost per unit of product P ?
please help me !! the answer must be 8 and i dnt know how to get it
You need first to calculate the cost per in each of the two departments.
So for department 1, it will be 50,000 divided by the total number of hours worked in department 1. For that you need to know how many units are produced of each product and how many hours each unit of Q takes.Once you have calculated the cost per hour for each department, then you can calculate the cost per unit for P. It will be (1 hours x dept 1 cost per hour) + (2 hours x dept 2 cost per hour).
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