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Question:
The predicted selling price for a product has been set at $ 56 per unit .The desired mark-up on cost is 25 % and the material cost for the product is estimated to be $ 16 before allowing for additional materials to allow for shrinkage of 20 % ( for every 10 kg of material going in only 8 kg comes out).If labour is the only other cost and 2 hours are needed what is the most the business can pay per hour if a cost gap is to be avoided?
Why are you attempting questions for which you do not have an answer? You should be using a Revision Kit from one of the ACCA approved publishers. They have answers and explanations.
The target cost is 100/125 x $56 = $44.80
The material cost is 10/8 x $16 = $20
It should now be obvious to you what the maximum labour cost per hour is 🙂
Hi i have the same doubt as this question is from kaplan exam kit Que 45 i don’t understand how they got labour as 24.80
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