- December 6, 2021 at 4:33 pm #642748lokeshdh00Participant
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Its a question from specimin exam, To calculate tar ratio, the cost per factory hour is 42.56, And i couldn’t figure that how , its not explained. I tried adding all cost which 186400 ad then divide by total hours ( 8*50*6) but it gives wrong answer
Glam Co is a hairdressing salon which provides both ‘cuts’ and ‘treatments’ to clients. All cuts and treatments at the salon are carried out by one of the salon’s three senior stylists. The salon also has two salon assistants and two junior stylists.
Every client attending the salon is seen first by a salon assistant, who washes their hair; next, by a senior stylist, who cuts or treats their hair depending on which service the client wants; then finally, a junior stylist who dries their hair. The average length of time spent with each member of staff is as follows:
The salon is open for eight hours each day for six days per week. It is only closed for two weeks each year. Staff salaries are $40,000 each year for each senior stylist, $28,000 each year for each junior stylist and $12,000 each year for each of the assistants. The cost of cleaning products applied when washing clients’ hair is $1.50 per client. The cost of all additional products applied during a ‘treatment’ is $7.40 per client. Other salon costs (excluding labour and raw materials) amount to $106,400 each year.
Glam Co charges $60 for each cut and $110 for each treatment.
The senior stylists’ time has been correctly identified as the bottleneck activity.December 6, 2021 at 4:49 pm #642758John MoffatKeymaster
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Please do not type out past exam questions in full because they are copyright of the ACCA and so we are not allowed to publish them. I have all past exam questions (and the BPP Revision Kit), so you only need to tell me which question.
I do not know where you are getting $186,400 from. The factory costs are all costs apart from materials. Here the costs excluding labour and materials is $106,400 (per the question), and so we need to add to this the labour costs, which are (3 x $40,000) + (2 x $28,000) + (2 x $12,000) = $200,000 per year.
So the total factory cost is $306,400 per year.
The bottleneck activity is the senior stylists time, which is 7,200 hours.
Therefore the cost per factory hour is 306,400/7,200 = $42.56.
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