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Department S T
Allocated or apporti- $60k $100k
oned Fixed O/HTotal direct material $120k $100k
costTotal productive 5,000 10,000
Labour hoursMaterials: $
Dept S 3kg @ $4 per kg 12
Dept T 2kg @ $4 per kg 8
What is the fixed O/H cost per unit if fixed O/Hs are absorbed on the basis of departmental material cost?
Answer: $14
I am unable to figure out the method to arrive at the answer. I find it a little complicated and need help solving this problem.
Thank you ?
The overheads per $ of material in department S are 60/120 = $0.50
The overheads per $ of material in department T are 100/100 = $1.00Therefore the total overheads per unit are: (12 x 0.50) + (8 x $1) = $14.
Thank you so much Sir. I mean you made it look so easy. It’s so much clear now. I’m really thankful to you.
Have a great day Sir.
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