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MA BPP Revision Kit 2020-2021, Budgeting, 10a.3, Pg79

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › MA BPP Revision Kit 2020-2021, Budgeting, 10a.3, Pg79

  • This topic has 3 replies, 2 voices, and was last updated 4 years ago by John Moffat.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • March 31, 2021 at 5:23 pm #615616
    Asif110
    Participant
    • Topics: 70
    • Replies: 125
    • ☆☆

    Greetings sir,
    Hope you are stronger by time,

    Something of contention I came across:

    10.a3,
    I calculated the Labour for 83% just the way I did for material (2120/80 x 83%), and then I calculated the Production overhead using the high low method. The final answer I got as a result of this procedure was: 8755.5 ~ 8756.

    83%
    M = 2490
    L = 2199.5
    O/H = 4066 (v.c = 2, f.c = 3900)
    Total: 8755.5

    However, they preferred somehow to calculate both the labour and overhead together combined using the high low method in order to find the variable cost – strange, and reached a different answer.

    Please assist with your great knowledge.

    April 1, 2021 at 8:33 am #615641
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54699
    • ☆☆☆☆☆

    Labour here is not a variable cost. If it were then the cost per % would be the same at both the 80% and the 90% levels, and it isn’t the same.

    April 2, 2021 at 4:02 am #615722
    Asif110
    Participant
    • Topics: 70
    • Replies: 125
    • ☆☆

    Thanks sir, I get it now. Reminder of the basic principles. Nice question.

    April 2, 2021 at 9:19 am #615746
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54699
    • ☆☆☆☆☆

    You are welcome

  • Author
    Posts
Viewing 4 posts - 1 through 4 (of 4 total)
  • The topic ‘MA BPP Revision Kit 2020-2021, Budgeting, 10a.3, Pg79’ is closed to new replies.

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