Financial Performance Management

FINANCIAL
PERFORMANCE
MANAGEMENT

Table of Contents
Question: 1...................................................................................................................................3
Question: 2...................................................................................................................................6
Question: 3...................................................................................................................................7
REFERENCES................................................................................................................................1

Question: 1
Particulars Lip Stick Lip-balm lip-gloss
No. of units produced 30000 35000 3000
Per unit cost of direct material 5 10 10
Direct labour hours per unit 3 2 2
Labour cost per hour 5 5 5
Per unit cost of direct labour 15 10 10
Overhead costs
Cost of receiving orders 30000
Cost of despatching orders 15000
Set up cost 120000
Machining costs 65000
Total overhead cost 230000
a) Calculating cost and profit per unit through the absorption of above overheads on the basis of
labour hours
Lip stick Lip balm Lip gloss
Units manufactured 30000 35000 3000
Direct labour hours/ unit 3 2 2
Direct hours of labour per product 90000 70000 6000
Total hours of labour 166000
Absorption rate of overheads on the basis of
labour hours= total overheads / total direct labour
hours = 230000 / 166000 = 1.39
1.39 * 3 =
4.17
1.39 * 2 =
2.78
1.39 * 2 =
2.78
Per unit cost
Direct material cost / unit 5 10 10