BB plc expects that the average unit variable cost data for an initial batch of 200 units will be as follows:

22 Direct material: 15m at 10 $/m .

Direct labor:

Department A: 8 hours at $12 per hour; and

Department B: 100 hours at $10 per hour.

Variable overhead: 20 per cent of labor.

Labor times in department A are expected to follow an 90 per cent learning curve.

Department B labor times are expected to follow a 70 per cent learning curve.

You have been asked to provide calculations of total variable costs for a contract for one of its products, based on the following alternative situations:

1) A contract for one order of 600 units.

2) Contracts for a sequence of individual orders of 200, 100, 100 and 200 units. Four separate costings are required.

Answer rating: 100% (QA)

BB plc Variable Cost Calculations Unit Variable Costs 1 Direct Material 15 meters at 10meter 150 per unit 2 Direct Labor Department A Initial Time 200 ... View the full answer