ACCA MA · Chapter 6 · Question 6 of 11
Budgeted production overheads were $360,000 and budgeted labour hours were 24,000. Actual overheads were $372,000 and actual labour hours were 25,000. What was the under- or over-absorption of overheads?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) $3,000 over-absorbed
Explanation
OAR = 360,000 / 24,000 = $15 per hour. Overheads absorbed = 25,000 x 15 = $375,000. Actual overheads = $372,000. Absorbed is more than actual, so overheads are over-absorbed by 375,000 - 372,000 = $3,000.
More Accounting for overheads MCQs
- Q8A company absorbs production overheads on machine hours. Budgeted machine hours were 30,000. Actual overheads were $496,000, actual…
- Q9At the end of a period, production overheads have been under-absorbed. How is the under-absorption accounted for?
- Q10Why are separate departmental overhead absorption rates usually preferred to a single factory-wide (blanket) rate?
- Q11A job uses 12 machine hours in Department X, which absorbs overheads at $22 per machine hour, and 30 direct labour hours in Department Y…
- Q1What is meant by overhead allocation?