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overhead Absorption rate for department
P—10$ based on labour hour
Q-50%of prime costproduct X
Dm-8$*5-40
dl–5$*10=50prime cost =90
overhead 100+45=235
(40+50)*50%=45
how can i find cost per component for product?
I just came from exam but there was question like that?could you help me?there were not any units to find cost per component of production
But you do not need to know how many units were produced!
You know that the prime cost is 90 per unit, therefore overhead Q is 50% x 90 = 45 per unit.
You know that each unit takes 10 hours of direct labour, therefore overhead P = 10 hours x $10 = 100 per unit.
Therefore the total cost per unit = 90 + 45 + 100
My Dear Tutor, i calculated in your way but there was not the figure of 235 that is why i asked.I really report this issue to ACCA 25of July i took exam and there was question like that but the question did not show the correct option.
I several times read the question for memorising it.
My another question,i do not have any problems in standard cost and variance analysis but sometimes they give such as
budgeted sales volume =budgeted material cost of sales/standard material cost
budgeted profit margin per unit=budgeted monthly profit margin/budgeted monthly sales volume
Actual sales units
budget sales units
difference*budgeted profit margin per unitwhen i apply this method in your given example of exercise in opentution lecture note, i can not get the same result but in Bpp test bank there is question like that which confused me
On what you typed initially, the answer I gave you is correct.
It would be very unusual for there to be a mistake in the real exam and it is more likely that there was something in the wording that you have not remembered correctly.The first of the two ‘equations’ that you have written is not correct.
The budgeted sales volume is the number of units that they expect to sell. Budgeted cost of sales/standard material cost will give the budgeted production and this does not have to equal the budgeted sales – it depends on what they are budgeting happening to the inventory.
The difference between the actual and the budgeted sales, multiplied by the budgeted profit per unit, will give the sales volume variance (assuming they are using absorption costing). I cannot comment on the questions you refer to without knowing which questions they are!
I really several times calculated it and got 235 and i did not see this figure.There was only 4 options which did not reflect 235 unfortunately
In that case, as I wrote before, either there was a mistake in the exam or (and you won’t like this, but more likely) there was some wording in the question that you missed!
Are you sure it asked for the cost per unit? Maybe, for example, it gave a selling price and asked for a profit per unit. Or maybe, again for example, it gave a mark-up and asked for a selling price per unit.
However, without being able to see the exact question as it was asked, I cannot help more 🙁
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