• Skip to primary navigation
  • Skip to main content
Free ACCA & CIMA online courses from OpenTuition

Free ACCA & CIMA online courses from OpenTuition

Free Notes, Lectures, Tests and Forums for ACCA and CIMA exams

  • ACCA
  • CIMA
  • FIA
  • OBU
  • Books
  • Forums
  • Ask AI
  • Search
  • Register
  • Login
  • ACCA MA:
  • MA Notes
  • MA Lectures
  • Practice Questions
  • Flashcards
  • Revision Exam
  • Revision Lectures
  • MA Forums
  • Ask the Tutor
  • Ask AI (New!)

20% off ACCA & CIMA Books

OpenTuition recommends the new interactive BPP books for March and June 2025 exams.
Get your discount code >>

Accounting for overheads part 1 – ACCA Management Accounting (MA)

VIVA

Reader Interactions

Comments

  1. L.Thenuka says

    May 22, 2023 at 11:45 pm

    Dear John,
    Please acknowledge if the below method can be used as an alternative approach to arriving at the ‘Fixed Overhead’ for Desks & Chairs in Example ‘2’;

    Total FC for Desks: (120,000hrs 梅 140,000hrs) x $700,000 = $600,000
    Fixed Cost ‘Per Unit of Desk’: $600,000 梅 30,000Units = “$20”

    Total FC for Chairs: (20,000hrs 梅 140,000hrs) x $700,000 = $100,000
    Fixed Cost ‘Per Unit of Chair’: $100,000 梅 20,000Units = “$5”

    Thank You Very Much! 馃檪

    Log in to Reply
    • John Moffat says

      May 23, 2023 at 7:09 am

      That would have been fine – nobody looks at your workings in the exam, all the computer marks is the final answer. However if the question has just asked for the absorption rate then obviously this would not have been fine because the absorption rate is $5 per hour.

      Log in to Reply
      • L.Thenuka says

        May 24, 2023 at 2:02 pm

        Noted,
        Thank You for the prompt response!

  2. Salexy says

    October 25, 2022 at 8:54 am

    Good morning sir, does the estimated overhead p.a relate to the overheads in producing products or all overheads of the company including administrative costs?

    Log in to Reply
    • John Moffat says

      October 25, 2022 at 4:54 pm

      It depends on what the question says, but for standard costing it is just the production overheads.

      Log in to Reply
  3. mannannagpal says

    September 3, 2022 at 1:37 pm

    why do we not charge variable overheads in cost per unit?

    Log in to Reply
    • John Moffat says

      September 4, 2022 at 6:18 pm

      We do if there are any variable production overheads. Which example are you referring to?

      Log in to Reply
      • John Moffat says

        September 5, 2022 at 5:29 pm

        By definition, variable overheads vary with the level of production and would therefore be charged on a per unit basis.

  4. taurusrichkid says

    August 6, 2022 at 11:46 am

    Hi,
    Could you please tell me which study material is better for Acca? Bpp or kaplan?

    Log in to Reply
    • opentuition_team says

      August 7, 2022 at 9:10 am

      They are both good and are both ACCA Approved. I prefer BPP, but everybody has their own preferences.

      Log in to Reply
  5. sohaib.ahmad says

    July 17, 2022 at 8:51 am

    sir in example 2, why did you calculate hours and not an alternate

    Log in to Reply
    • John Moffat says

      July 17, 2022 at 9:52 am

      Because the question says “Overheads are to be absorbed on a labour hours basis”.

      (Did you download our free lecture notes before watching the lecture?)

      Log in to Reply
  6. SarahHaytasingh says

    September 19, 2021 at 7:35 pm

    You are so clear and straightforward and precise with everything you teach! I am self studying and have been advised to use opentuition along with BPP and/or Kaplan revision kit because I can鈥檛 afford tuition. I am hopeful that I will pass with a remarkable grade because of you Mr and John and off course God Almighty!

    Log in to Reply
    • John Moffat says

      September 20, 2021 at 6:55 am

      Thank you for your comment 馃檪

      Log in to Reply
    • 5327900ALLEN says

      March 5, 2022 at 8:49 am

      Am Alllen from Uganda. ve also chosen to carry on with opentution alongside BPP workbook and the Revision Kit… But is it the best advice or something not told?

      Log in to Reply
  7. MohamedH says

    September 10, 2021 at 11:01 am

    Great

    Log in to Reply
  8. danish1112 says

    March 17, 2021 at 3:36 pm

    Hi john ,
    In example 1 for overhead absorption rate we divide total cost by total unit bit in later examples we divide total cost by yotal hrs….
    As per my understanding you said that their is no specific rule which means we can do both but what if i calculate in exam with one of the option and i get the wrong answer please reply me thanks.

    Log in to Reply
  9. gkumar84@live.com says

    November 22, 2020 at 9:26 pm

    Everything seems to be nice and easy but after the lecture when I go to the first example then the next one is forgotten.

    But fantastic John!

    Log in to Reply
  10. gkumar84@live.com says

    November 22, 2020 at 9:22 pm

    A question I can’t get the sense of:

    Vare produces inks at its Normanton factory. Production details for process 1 are as follows:
    Op Work in prog, 1 April 400 units 60% complete
    Cl work in prog, 30 Apri 600 Units 20% complete
    Unit Started 1000
    Unit finished 800
    The degree of completion quoted relates to the labour and overhead costs,. 3/4 of the materials are added at the start of the process and remaining quarter added when the process is 50% complete. the company uses FIFO method of cost allocation.

    Waht are the equivalent units f production for materials in the period?

    Log in to Reply
    • John Moffat says

      November 23, 2020 at 9:51 am

      You must ask this kind of question in the Ask the Tutor Forum and not as a comment on a lecture.

      Log in to Reply
      • gkumar84@live.com says

        November 24, 2020 at 4:27 pm

        Apologies. Shall do, still getting way around.

      • John Moffat says

        November 24, 2020 at 5:30 pm

        No problem 馃檪

  11. ABDULLAHI312 says

    November 5, 2020 at 9:14 am

    Hi sir. like we expressed every cost by ‘per desk’ or ‘per chair’, why not do the same for labour? I mean in the examples we were doing labour cost was expressed per hour giving an assumption of a single labour. what if it takes 3 to 4 labours to make a single desk? please clarify. thanks.

    Log in to Reply
    • John Moffat says

      November 5, 2020 at 10:29 am

      We do express the cost per unit. The labour cost per desk is $8.

      We calculate the cost per unit by multiplying the number of hours by the labour rate per hour. It is no different that the way we calculate the materials cost – we multiple the number of kgs by the cost per kg.

      If it took 3 workers to make a desk then we would use the number of hours the 3 workers took in total.

      Log in to Reply
  12. shazia786 says

    September 10, 2020 at 3:13 pm

    Hi John,

    At the end where did you get the time spent eg:
    3h X..
    1hr X

    and
    1/2 x$3 etc , Where these hours spent as estimated?

    Log in to Reply
    • John Moffat says

      September 10, 2020 at 3:22 pm

      They are given in the question. Have you downloaded the free lecture notes as explained at the start of each lecture?

      Log in to Reply
  13. DhirajACCA says

    May 5, 2020 at 9:24 am

    Good Morning Sir,

    I had a query regarding the Fixed O/Hs workings in example 2 & 3.

    The Fixed O/H in example 2 is $20 for Desks & $5 for Chairs , however in example 3 the Fixed O/H are $19 ( Desks ) & $6.5 ( Chairs ).

    My question is why is there this difference between the 2 examples although the number of hours each item spends in the respective department hasn’t changed ( 4 hrs & 1hr )

    The Fixed costs are still $700,000 also.

    Is this minor change in amount due to the apportioned costs of 60% : 40% , which are quite random in nature ?

    Thank you for your reply in advance.

    Log in to Reply
    • John Moffat says

      May 5, 2020 at 4:09 pm

      The difference is because we are calculating an absorption rate for each department separately rather than doing it for the factory as a whole.

      The difference here may be minor, but it could be a lot greater.

      You say that the apportioning is quite random, but that is not true as you will see in the later examples. It is always impossible in practice to apportion precisely but in practice we attempt to apportion as sensible as possible (and obviously in exams we do what we are told).

      Log in to Reply
      • DhirajACCA says

        May 6, 2020 at 8:20 pm

        Dear Sir,

        Thank you for timely response. I appreciate you taking the time out to do so.

        Wish you a wonderful day ahead.

  14. DhirajACCA says

    May 2, 2020 at 6:19 pm

    Thank you for the lesson Sir.

    Log in to Reply
    • John Moffat says

      May 2, 2020 at 7:07 pm

      You are welcome 馃檪

      Log in to Reply
  15. june1104 says

    April 23, 2020 at 12:31 pm

    Hello Sir,

    Thanks for the lecture.

    But I think the overheads absorption rate in example 1 should be 3.5 [= 700 000/(50 000*4)] and 14 (=4*3.50) is total fixed costs.

    Could you please tell me if understand correctly about this point?

    Log in to Reply
    • John Moffat says

      April 23, 2020 at 5:04 pm

      The absorption rate per unit is the fixed costs (700,000 per year) divided by the units produced per year (50,000).

      The total fixed costs are given in the question and are $700,000.

      Log in to Reply
  16. aftab2628 says

    February 14, 2020 at 6:35 pm

    can you please explain how these numbers coming 240000
    600,000(40%)
    can you please guide I am struck in it

    Log in to Reply
    • konichan says

      March 9, 2020 at 3:29 am

      600,000 x 40% (0.4) = 240,000

      or another way: 600,000 x 40/100 = 240,000

      Log in to Reply
  17. jacksonzua says

    February 18, 2019 at 10:11 am

    great lecture

    Log in to Reply
    • John Moffat says

      March 9, 2020 at 4:03 pm

      Thank you for your comment 馃檪

      Log in to Reply

Leave a Reply Cancel reply

You must be logged in to post a comment.

Copyright © 2025 路 Support 路 Contact 路 Advertising 路 OpenLicense 路 About 路 Sitemap 路 Comments 路 Log in