Financial Accunting Revision Solutions

# Financial Accunting Revision Solutions - 1 i a Percentage...

• Homework Help
• 6

This preview shows pages 1–3. Sign up to view the full content.

1) i) a) Percentage on direct labour cost rate Department A Department B £90,000 £85,000 £150,000 = 60% on direct labour cost £23,375 = 364% on direct labour cost (rounded) b) Direct labour hour rate Department A Department B £90,000 £85,000 15,000 hours = £6 per direct labour 2,125 hours = £40 per hour direct labour hour (rounded) c) Machine hour rate Department A Department B £90,000 £85,000 3,000 hours = £30 per machine hour 42,500 hours = £2 per machine hour 1

This preview has intentionally blurred sections. Sign up to view the full version.

ii) a) The percentage on direct labour cost method is relatively easy to use since direct labour cost is often charged to cost units or products and therefore may be used as a basis for attracting overheads to products. However, there are a number drawbacks. For example, many overheads are incurred on a time basis, and the use of direct labour does not use a time factor only. In addition, when operators are paid different hourly rates of pay, this method results in an inequitable charge of overheads to different products. b) The rate per direct labour hour is often preferable and would
This is the end of the preview. Sign up to access the rest of the document.
• Spring '14
• ismailov

{[ snackBarMessage ]}

### What students are saying

• As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

Kiran Temple University Fox School of Business ‘17, Course Hero Intern

• I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

Dana University of Pennsylvania ‘17, Course Hero Intern

• The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

Jill Tulane University ‘16, Course Hero Intern