Anyone confused for Q 78, the increase in the labor hours will drop the absorption rate from 8 because the no. of hours is increased but would not add to the total fixed costs which were initially divided by the number of hours to get the rate as 8. That's why its not part of the relevant cost calculation. The hours input has increased but the cost of those hours has not increased.
Anyone confused for Q 78, the increase in the labor hours will drop the absorption rate from 8 because the no. of hours is increased but would not add to the total fixed costs which were initially divided by the number of hours to get the rate as 8. That's why its not part of the relevant cost calculation. The hours input has increased but the cost of those hours has not increased.
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Just reading the solutions. Very less detailed explanations and logics.
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