ACCA MA · Chapter 8 · Question 3 of 12
A batch of 500 units incurs the following costs: direct materials $3,000, direct labour $1,800 and machine set-up $450. Production overheads are absorbed at 150% of direct labour cost. What is the cost per unit?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) $15.90
Explanation
Overheads = 150% x 1,800 = $2,700. Total batch cost = 3,000 + 1,800 + 450 + 2,700 = $7,950. Cost per unit = 7,950 / 500 = $15.90. The set-up cost is a batch cost and must be included.
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