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Single product company

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › Single product company

  • This topic has 3 replies, 2 voices, and was last updated 2 years ago by John Moffat.
Viewing 4 posts - 1 through 4 (of 4 total)
  • Author
    Posts
  • July 20, 2022 at 5:19 pm #661462
    AkshayD19
    Participant
    • Topics: 1
    • Replies: 1
    • ☆

    Hello. Why is there no need for a single product company to allocate and apportion overheads in order to determine overhead cost per unit?
    Can you give an example?
    Thanks

    July 20, 2022 at 5:32 pm #661469
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54699
    • ☆☆☆☆☆

    Because all of the overheads only relate to one product. We only need to share the overheads between products when there is more than one product.

    Have you watched my free lectures on the allocation and absorption of overheads, because I work through lots of examples in the lecture. The lectures are a complete free course for Paper MA and cover everything needed to be able to pass the exam well.

    July 20, 2022 at 8:03 pm #661478
    AkshayD19
    Participant
    • Topics: 1
    • Replies: 1
    • ☆

    Yes I have watched them sir but I don’t understand..please help me!

    Thanks

    July 21, 2022 at 6:50 am #661498
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54699
    • ☆☆☆☆☆

    The only reason for allocating and absorbing is to be able to spread the overheads between several products.

    If they only make one product then if (for example) the total overheads are $100,000 and if they produce 10,000 units, then the overheads per unit are 100,000/10,000 = $10.

    Only if there are two or more products do we have to find a way of deciding how much of the overheads should be given to each of the products.

    I do suggest that you rewatch the lectures.

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