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June 2008

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA PM Exams › June 2008

  • This topic has 4 replies, 2 voices, and was last updated 7 years ago by John Moffat.
Viewing 5 posts - 1 through 5 (of 5 total)
  • Author
    Posts
  • February 6, 2018 at 9:05 pm #435558
    Ema
    Member
    • Topics: 73
    • Replies: 107
    • ☆☆

    sir,

    In Question 4 I am not getting how did the examiner has worked out the overheads.

    Please guide me to it’s working.

    Thanks

    February 7, 2018 at 1:33 pm #435675
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54699
    • ☆☆☆☆☆

    You will have to be more specific as to which bit of the workings you are not clear about – is it the current way of absorbing, or the ABC way?

    The total overheads of $2,880,000 are given in the question.

    February 8, 2018 at 6:39 am #435830
    Ema
    Member
    • Topics: 73
    • Replies: 107
    • ☆☆

    The ABC way!

    February 8, 2018 at 9:03 am #435864
    Ema
    Member
    • Topics: 73
    • Replies: 107
    • ☆☆

    Sorry my mistake it was the absorption part which is a hurdle.

    February 8, 2018 at 11:12 am #435896
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54699
    • ☆☆☆☆☆

    The question says that they currently use absorption costing based on machine hours.

    They produce 1,000,000 CB’s and each CB takes 6 minutes. So in total they will spend 1,000,000 x 6/60 = 100,000 hours.

    They produce 10,000 TJ’s per month, so 120,000 a year. Each TJ takes 10 minutes, so in total they will spend 120,000 x 10/60 = 20,000 hours.

    So the total hours are 100,000 + 20,000 = 120,000 hours.

    Therefore the absorption rate is 2,880,000 / 120,000 = $24 per hour.

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