Hello Sir,
i have doubt in question number 223 in kaplan exam kit.
they have asked us to calculate the flexed total cost of production for 80% capacity.
the maximum capacity is given as 262500 units of which the 80% capacity is 210000 units
materials pu - 4 , labour pu - 5.5 , FC - 750000
they have said that for each increment of 50000 units produced one supervisor will be employed at a cost of $ 35000
i cannot understand why they have calculated the total cost of supervisors by taking the number of supervisors as five instead of four.
could you please explain this.
thanks in advance
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flexed budgeting
7y ago
7y ago#1I do not have the Kaplan Exam Kit (only the BPP Revision Kit).
However 4 supervisors would only be able to deal with 4 x 50,000 = 200,000 units.
Since they are going to produce 210,000 units, it will need an extra supervisor to deal with the extra 10,000 units. (It is obviously not possible to employ 1/5 of a supervisor :-) )
7y ago#2please correct me if my answer to this question is wrong.
80% capacity - 210000
materials=4*210000 = 840000
labour = 5.5* 210000 = 1155000
FC = 750000
supervisor costs = 4*35000 = 140000
total cost = 2885000
7y ago#3It was from the past exam paper
CORFE CO, Sept 2016
7y ago#4Your answer is wrong because you have only included the cost of 4 supervisors and not 5 supervisors. I have explained why it is 5 supervisors in my previous reply.
You can see the correct answer yourself in your Exam Kit, or by downloading the answers to this exam on the ACCA website.
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