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question 3, BPP mock exam 3.
p1. p2
fixed overhead $1.20 $1.00
budeted production is:
p1 – 10000 units
p2 – 12500 units
fixed overhead costs included in p1 relate to apportionment of general overhead cost only, However, p2 also included specific fixed overhead totalling $2500.
ans- fixed overhead- (1.20*10000) for p1
(1.00*12500)-2500 for p2. why was the specific fixed overhead deducted from the fixed overhead of p2?The total fixed costs are calculated using the budget figures, and so are (10,000 x $1.20) + (12,500 x $1.00) = $24,500.
The question asks what happens if only P1 is made. In that case the total general fixed overheads will stay the same, but the $2,500 of them that relates only to production of P2 will be saved.
So the total overheads will then be 24,500 – 2,500 = $22,000. These will be $22,000 however many units are produced.oh! thank you, Sir. I think my problem is the inability to read and understand the questions well. Due to the time pressure.. I never saw the ‘if only p1 is made’
Do you have any suggestions or advice towards tackling this problem?
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