Hi John,
For question 2 in the calculation which 250,000 is used to arrive at 750,000
Is it the given factory overhead cost 250,000
Or machine time 5,000hrs /0.2hrs = 25,000units x$10 = 250,000?
Why isn’t it both, I thought all costs apart from materials is included in cost per factory hour?
Many Thanks
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Throughput practice question 2of5
3y ago#1The total factory cost is the total of all costs apart from materials, and so is the labour cost (100,000 x $5) plus the overheads ($250,000).
Machine costs are an overhead and so are already included in the 250,000 (and you are not given the cost of machine time separately anyway!).
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