Page 302 - P1 Integrated Workbook STUDENT 2018

Subject P1: Management Accounting

4.5 The answer is $0.2.
Total purchase order costs
Cost per purchase order = ––––––––––––––––––––––––––
Total number of purchase orders

$60,000
= –––––––––––––––––––––––––––––––
[(1,000 × 2) + (2,000 × 1) + (2,000 × 1)]

= $10 per purchase order

The number of batches was calculated by dividing the annual production by the
batch size.

Product D 100,000/100 = 1,000
Product R 100,000/50 = 2,000
Product P 50,000/25 = 2,000

1 batch of Product D requires 2 purchase orders.

Cost per batch of Product D = 2 × $10 = $20. There are 100 units in a batch.

Budgeted purchase order cost per unit = $20/100 = 0.2

4.6 D

Seasonally adjusted sales = ((5 × 16) + 60) × 1.10

= 140 × 1.1

= 154 units

4.7 A

Activity $
High 58,613 739,257
Low 45,713 615,417
–––––– –––––––

12,900 123,840
–––––– –––––––

Variable cost per hour  $123,840/12,900  $9.60

Fixed cost  $739,257 – (58,613 × $9.60)  $176,572

Expected cost of 50,000 machine hours  $176,572  (50,000 × $9.6) 
$656,572

298