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setup cost

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA PM Exams › setup cost

  • This topic has 1 reply, 2 voices, and was last updated 1 year ago by John Moffat.
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  • Author
    Posts
  • May 4, 2021 at 8:13 am #619602
    daisy598
    Member
    • Topics: 13
    • Replies: 6
    • ☆

    Close Ltd produces 2 products : Product X and Product Y.
    X is produced in batches of 1000 units each time.
    Y is produced in batches of 5000 units each time.
    15 batches each of X and Y produced each month.

    Total Set up cost : $30000 each month, Close Ltd uses ABC with number of production runs as cost driver.

    Set up cost per unit of Product X is ?

    Are my Ans correct ?

    X : (15*1000u) / 1000 u = 15
    Y : (15*5000u) / 5000 u = 15
    Total batches = 30

    Total cost / batch = $30000/30 = $1000
    OH to X : 15*$1000 = $15000
    OH per unit of X : $15000/15000 = $1

    May 4, 2021 at 9:44 am #619620
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 51543
    • ☆☆☆☆☆

    Your answer is correct 🙂

    (Although why are you attempting a question for which you do not have an answer? You should be using a Revision Kit from one of the ACCA Approved Publishers, because they have answers 🙂 )

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