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Question : Firm offers short revision courses on taxation and auditing. Annual overheads $152,625.Until recently firm has applied overheads on volume basis,based on number of course days offered.Only consultant own time in direct variable cost.All students run with maximum number of 30 students. Following are the information.
No of courses sold Duration of courseAuditing 50 2
Taxation 30 3Problem: 1) I cannot understand what is number of course days offered actually.
2) How do we calculate OH per course based on traditional method.The number of course days is (50 x 2days) + (30 x 3 Days) = 190 days.
So now you can work out the overheads per day by dividing the total overheads by the number of days.
The overheads for an auditing course is 2 days x overheads per day, and the overheads for a taxation course is 3 days times the overheads per day.
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