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Costing

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › Costing

  • This topic has 1 reply, 2 voices, and was last updated 2 years ago by John Moffat.
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  • October 14, 2022 at 4:39 pm #668632
    reckless
    Member
    • Topics: 45
    • Replies: 112
    • ☆☆

    House Co also plans to manufacture 90 sofas in june. Below are some extracts from the cost card for a sofa.

    Materials- 10m^2 of fabric @$50 per m^2. =$500

    Assembly labour- 8hours @$15 per hour =$120

    How many metres of fabric should be purchased if 10% of material is wasted during the production process?

    Sir i know required for production is 900m^2 {90×10)

    But in kit they’re adding waste =100 from where is this coming from 10% of 900 would be 90, also why we adding it with usage it’s like normal loss which we deduct from input to find output, please explain this sir

    October 15, 2022 at 11:40 am #668678
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54699
    • ☆☆☆☆☆

    The cost card is showing the material being used in production which is 900 m^2

    For every 10 m^2 purchased, 10% is wasted and therefore only 9 is available for production.

    Putting it the other way round, for every 9m^2 used in production they will need to purchase 10m^2.

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