CIMA BA2 · Chapter 3 · Question 7 of 8
A company absorbs production overheads at $12 per machine hour. During the period 28,000 machine hours were worked and overheads were over-absorbed by $9,200. What were the actual production overheads for the period?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) $326,800
Explanation
Overhead absorbed = 28,000 x $12 = $336,000. Over-absorption means more overhead was absorbed than was actually incurred, so actual overhead = $336,000 - $9,200 = $326,800.
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