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Dear Tutor
Grateful if you can help me out with this question.
I am looking at the answer sheet of this question and unable to understand how the examiner has calculated the below:-
Avg dishes per order 6 1
No of Orders 14,400 1,600
Total Number of dishes 86,400 1,600
ABC absorption cost per dish $6.22 $106.22In the question it says that Each order contains an average of 5.5 dishes and then goes on to say that each std orders have 6 dishes and each specialised orders have 1 dish.
I calculated 6/7x(16000×5.5) for std orders and 1/7x(16000×5.5) for specialised orders.
Thank you for bringing some clarity on the above..
There are 16,000 orders per year; note 2 states that 90% are for standard amd 10% specialist. Therefore 14,400 and 1,600.
Note 6 says that each standard dish order = 6 dishes, and note 7 that each specialist = 1 dish
6 x 14,400 = 86,400; 1 x 1,600 = 1,600
Total ABC costs, standard = 537,320. 537,320/86,400 = $6.22
Total ABC costs, specialised = 169,680. 169,680/1,600 = 106.05 [not 106.22 as you stated]
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