Basic Accounting Question - Help!

[Marmot]

Can somebody please solve this for me?




14. A company produces two product lines, as follows;
Product X Product Y
Units produced 5,000 4,000
Labour cost per unit (£10/HR) £20 £30
Material cost per unit £25 £48


Assuming that the overheads for the period total £165,000 and are absorbed on the basis of labour time, what would be the full unit cost of one unit of product X?
a. £60
b. £63.33
c. £45
d. £48.33
e. £50

My answer comes out at 58.2, which is not represented on the list.

£165,000/5(Total hours) = £33k/hr
£33k*2(Product X) = £66k
£66k/5,000(units) = £13.2 per unit
£13.2 + £20 + £25 = £58.2...

What am I doing wrong? Thanks.

 

[shine]

I don't see your calculations for product y.

 

[Marmot]

I don't see your calculations for product y.

Why would you factor in product Y when it's asking for 1 unit of product X? Am I being moronic?

 

[Mercenary Keyboard Warrior]

its a

 

[Mercenary Keyboard Warrior]

Total hours = 5000x2 + 4000x3 = 22000
Overhead is 165000/22000 per hour = £7.5

X uses 2 hours = £15 overhead + labour £20 + material £25 = £60

 

[Marmot]

Total hours = 5000x2 + 4000x3 = 22000
Overhead is 165000/22000 per hour = £7.5

X uses 2 hours = £15 overhead + labour £20 + material £25 = £60

Thanks, I got it.

 

[mollymoo]

60
y = 3hrs x 4000 units
x = 2 hrs x 5000 units
= 22000 hrs
£165000 / 22000 = 7.5
(7.5*2)+20+25=60

Would be my guess

Edit Bugger too late

 

[Marmot]

60
y = 3hrs x 4000 units
x = 2 hrs x 5000 units
= 22000 hrs
£165000 / 22000 = 7.5
7.5+20+25=60

Would be my guess

Yup, you're both right and my calculations were flawed. Thanks.

 

[mollymoo]

Are you studying for AAT by chance, costs and revenues?

 

[Marmot]

As part of my degree I have Management Accounting, Financial Accounting and Financial Management modules... and Econometrics and other such excitements.

 

[mollymoo]

Aaaah sorry. The question you asked is something I've just been revising and thankfully passed as part of AAT, I thought you might be doing the same thing.

 

[gosshawk]

Aaaah sorry. The question you asked is something I've just been revising and thankfully passed as part of AAT, I thought you might be doing the same thing.

What level are you doing molly?
I just passed level two!

 

[mistercrabb]

I thought it looked like an AAT question too. I've passed my AAT and therefore forgotten how to do everything now.

 

[mollymoo]

What level are you doing molly?
I just passed level two!

Level 3 should be done with it in the next month hopefully.