ACCA MA · Chapter 12 · Question 10 of 10
Each unit of a product uses 3 kg of material at $4 per kg and 2 direct labour hours at $12 per hour. Variable overheads are $3 per labour hour and fixed overheads are absorbed at $5 per labour hour. What is the standard full (absorption) production cost per unit?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) $52
Explanation
Materials 3 x 4 = $12; labour 2 x 12 = $24; variable overhead 2 x 3 = $6; fixed overhead 2 x 5 = $10. Standard full cost = 12 + 24 + 6 + 10 = $52. The standard marginal cost would be $42, excluding fixed overhead. Both overhead rates are per labour hour, so they must be multiplied by 2 hours.
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