Blunt is considering a new project but is unsure how much overhead to include in the calculations to help him decide whether or not to proceed. Existing fixed overheads are absorbed at the rate of $8 per hour worked. Blunt is certain that the project will involve an incremental 500 labour hours. The project will involve extra machine running costs and these variable overheads cost him $4 per hour. The number of extra machine hours is expected to be 450 hours. The difference between this figure and the 500 labour hours above is expected idle time. The project will require a little more temporary space that can be rented at a fixed cost of $1,200 for the period of hire. This overhead is not included in the fixed overhead absorption rate above. What is the overhead to be charged against the project decision?
A、$3,000
B、$3,200
C、$7,000
D、$7,200
A、$3,000
B、$3,200
C、$7,000
D、$7,200
【参考答案及解析】
The relevant cash flow is: Extra variable overheads: 450 hours × $4/hr $1,800 Rent $1,200 Total $3,000 Fixed costs are not incremental and idle time would normally mean that the machines are not in use are so are not an incurred cost.
The relevant cash flow is: Extra variable overheads: 450 hours × $4/hr $1,800 Rent $1,200 Total $3,000 Fixed costs are not incremental and idle time would normally mean that the machines are not in use are so are not an incurred cost.