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I was wondering if you would be able to help me:
I am currently doing the test questions on F2 study material, section 7 accounting for overheads, however I am really stuck on question 5 on page 44. I am deeply baffled by it. Please help by shedding some light on how to answer it.Thank you very much
@lazyboy said:
which book u are using ?
u should read book before attempting questions.Nice advice braniac!!…OBVIOUSLY I would have to read the specific section before attempting the question!! It’s just that I did not understand the question!! Im using the BPP BOOK AND THE STUDY MATERIALS ON OPEN TUITION. THE QUESTION WAS ON THE STUDY MATERIALS ON OPEN TUITION – the one that you can download.
Answer: C
Solution:
direct material =$300
direct labour=$400
production overhead are absorbed on the basis of direct labour hours So we need to calculate Direct labour hours first then we will calculate Production overheads whos rate is $26/labour hour.
direct labour rate is $8 per hour and total labur cost is $400
direct labour hours = total direct labour cost /rate of labour hour
direct labour hours=$400/$8 = 50 hours
So
producation overheads = 50*$26=$1300Prime Cost = Direct labour +Direct material
Prime cost=400+300=$700Non production overheads= 120%of prime cost
Non production overheads=120%of $700=$840
Hence
total cost of job number1203=prime cost+production overheads+non poduction
-overheads
=$700+$1300+$840=$2840=C optionNow happy ?
I’m not just happy I’m delighted :). And thank you very much for your help.
Its much appreciated.
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