ROBBER CO (JUNE 2012) — OpenTuition Forums

SSagar3y ago

PART (B) Sir, i am not able to calculate the variable cost of making (231500 & 208320) for keypads and display screens. in book variable cost of making is (231500/80000) for keypads and (208320/80000) for display screen ACC TO my calculation cost of making (i.e keypads) in thousand(000) material - 164 labour 40 h&p 44 setup cost (variable) 27.5 in(000) its 275.5 for keypads and 266.32 for display .please correct me

IAW3005Tutor3y ago#1

The heat & power is a fixed cost not variable material 164 labour 40 setup cost (variable) 27.5 which equals 231.5 Then attributable fixed costs h&p 44 fixed m 4 deprec and ins 33.6 which equals 313.1 in total Cost of buy 328 giving a diff of 14.9

SSagar3y ago#2

then sir what this mean answer given back Note 1- it is equally as acceptable to have treated the heat and power costs as variable and include them in the above. It will not have changed the outcome and is entirely acceptable interpretation of the scenario.

IAW3005Tutor3y ago#3

It is TC of 313.10 compared to 328

TThameema1y ago#4

hi sir in this question how do we understand that the fixed cost in machine setup is a relevant cost and it is avoidable?

IAW3005Tutor1y ago#5

In note 4 it states that machine costs are semi-variable in nature So that means they are mixed variable and fixed It tells you that fixed are 4000 & 6000 which is relevant to assessing whether to buy in or make If you buy in v cost of making VC + FC Don't get hung up on the alternative method look at the original one.