ICAEW BIP · Chapter 3 · Question 2 of 8
A batch of 400 units used direct materials costing £2,600 and 30 direct labour hours paid at £16 per hour. Production overheads are absorbed at £22 per direct labour hour. What is the cost per unit of the batch?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) £9.35
Explanation
Total batch cost = materials £2,600 + labour (30 x £16) £480 + overheads (30 x £22) £660 = £3,740. Cost per unit = £3,740 / 400 = £9.35.
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