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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 advanceI 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 🙂 )
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please 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 = 140000total cost = 2885000
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It was from the past exam paper
CORFE CO, Sept 2016Your 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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