Student Doubts Forum

27.4

Re: 27.4

by Pedro Pinto da Silva Perdigão -
Number of replies: 0
Hello Chiara,

The mistake is on the calculation of the UROH. What you did is correct, but it doesn't account for the whole UROH you should consider. From the 496.000€ of budgeted fixed costs, only 471.200€ were allocated to COGM (496.000€ * 1.520.000€/1.600.000€). Thus, due to that, you already have 24.800€ of UROH, as you correctly pointed out.

However, you cannot forget that the actual manufacturing fixed costs were 532.000€
. You will have a total UROH of 60.800€ (532.000 - 471.200) because the MFC you allocated were lower by that amount than the actual MFC the company had in the period.

Hope this helps!

Pedro Perdigão