- This topic has 1 reply, 2 voices, and was last updated 4 years ago by
.
- Posts
robber (6/12)
For part b) of this question, why would the variable costs of heat and power not be included in arriving at the total variable cost
Also are the heat and power costs directly used for the production of keypads and display screens direct variable costs or direct fixed costs or are they indirect variable costs or indirect fixed costs and why.
For part b) of this question, should the total direct labour costs for 80000 units be used or the direct labour cost of $1 be used for 100000 units
For part b) of this question, on which basis to decide how many units should be manufactured of keypads and display screens. No selling price is given, so contribution per labour hour can not be calculated. Is it correct to calculate the labour cost per unit or total cost per labour, and then manufacture either keypads or display screens based on which one has lower total cost per labour hour or lower labour cost per unit.
The examiner has written a note in her answer stating “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 an entirely acceptable interpretation of the scenario.”
Part (b) is a make or buy question and the only approach is the one explained in my free lectures. No other approach is correct.
- The topic ‘section c’ is closed to new replies.