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Hi Tutor,
In the above question the examiner has not taken care of the $ 70 of the variable cost for each procedure includes the costs of sterilizing and maintaining the medical equipment and theatre after each procedure.
For the total factory costs he added 298000+250000=548000
I feel that we have to add that to factory general overhead ,
70* (600+1200)=126000
Can you please clarify,
Thanks.
Because it says –
$ 70 of the variable cost for each procedure includes the costs of sterilizing and maintaining the medical equipment and theatre after each procedure.
“After each procedure” – therefore why include it?
It states quite clearly after………therefore is not relevant to calculating TPAR of a procedure
Hi,
When it is after the procedures its cost where it has to be accounted .
I think it does affect the total cost of the factory overhead.
Since we care about the total cost of the factory.what you say?
Thanks
How do i calculate target cost provided i am given the selling price, ROI on all capitsl requirements and variable costs
To calculate the target cost, you can use the formula:
Target Cost = Selling Price – Variable Selling Costs – (Return on Investment * Cost of Capital)
Hi,
Yes I am calculating TPAR The formula is :
(THroughput/Time on key resource)/(total factory cost /total time of the bottleneck)
here comes the total factory cost other than materials
It is confusing to include $70 for sterilizing cost, only if it is assumed that it is already included.
please help me to clarify that,
Thanks,
As I have already explained
Because it says –
$ 70 of the variable cost for each procedure includes the costs of sterilizing and maintaining the medical equipment and theatre after each procedure.
“After each procedure” – therefore why include it?It states quite clearly after………therefore is not relevant to calculating TPAR of a procedure
I don’t know what else to say its not included because you are calculating the TPAR for THE procedure
The question clearly states the $ 70 of the variable cost for each procedure includes the costs of sterilizing and maintaining the medical equipment and theatre after each procedure.
SO IF YOU ARE VALUING THE PROCEDURE WHY INCLUDE THIS!!!!!!!!!!!!!!!!!!!!
MOVE ON ………………………………………………
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