relevant cost

This topic has 3 replies, 2 voices, and was last updated 5 years ago by John Moffat.

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November 4, 2020 at 9:07 pm #594084
abokor
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HI john, i hope u doing good.

management accountant estimates that for each increment of 50,000 units produced,
one supervisor will need to be employed.

i have extracted the above statement from September 2016 exam. my question is how many supervisors do we need at the activity level of 210,000 units.

my answer is 4 supervisors.
exam answer 5 supervisors.
November 5, 2020 at 9:18 am #594125
John Moffat
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The exam answer is correct.

If they only have 4 supervisors then they could only deal with 4 x 50,000 = 200,000 units.

In order to produce an extra 10,000 units they will need 1 more supervisor (since it is impossible to have just a fraction of a supervisor 🙂 ).
November 7, 2020 at 9:48 am #594347
abokor
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thanks john for your replay.

can’t we say that one supervisor stars with the production, and then for each increment of 50,000 units produced, one supervisor will need to be employed. since supervisor is needed to start with production.

thanks in advance.
November 7, 2020 at 1:56 pm #594360
John Moffat
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The first 50,000 (or part of) need one supervisor, for between 50,000 and 100,000 they will need 2 supervisors, for between 100,000 and 150,000 they will need 3 supervisors, and so on.
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