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January 13, 2021 at 9:08 pm
Very interesting videos. It’s so much easier when I study like that but I hope you update them because half of the lectures are removed from the textbooks.
December 30, 2020 at 3:10 pm
When you adjust for the closing inventory, are we not also adjusting for the overabsorption of fixed costs? i.e. the 2,000 overabsorption is included in the 54,000 that you subtract from the cost of sales?
I am sure that what you have done is correct, I just don’t understand how.
Would you please be able to help me understand this?
John Moffat says
December 31, 2020 at 8:09 am
In management accounting we always value inventories at the standard cost. So the adjustment for the over or under absorption is the difference is based on the overheads actually absorbed.
November 26, 2020 at 10:12 pm
HI John while Illustrating for Feb I am encountering the problem as follow: Sales 11500 * 35 $402,500 COS Materials 11,500 * 12 138,000 Labour 11,500 * 8 92,000 V OAR 11,500 * 5 57,500 Fix OH 9,500 * 2 19,000 ($306,500)
Adjustment Overhead (1,000)
Profit before the selling cost $95,000
other selling costs (13,500)
I am unable to see the problem please can you advise?
November 27, 2020 at 8:49 am
The opening inventory was 2,000 units, and the production in February was 9,500 units.
Check the answer as printed at the end of the lecture notes.
November 27, 2020 at 10:22 am
Thank you for your reply.. I did not realise the P&L was there and of course a rookie mistake of illogical stock reasoning. Feels bad as I wasted 3 days to figure this out.
Cheers though, grateful!
November 27, 2020 at 4:54 pm
No problem 🙂
November 18, 2020 at 10:57 am
Dear Mr Moffat, regarding fixed production overheads – you end up calculating as expense only 18K USD, moreover you recharge as income 2K USD to the final profit, which in my opinion should be the opposite, it should be recharged as expense 2K USD, hence the final profit 59K USD. Appreciate if you can look at this, and confirm your opinion.
November 11, 2020 at 7:27 am
Sir for January in absorption costing Why did you consider the $20,000 as budgeted It says in the question that “fixed production overheads are budgeted at $20,000 per month” So how do you assume that this was the actual???
Isn’t the actual figures supposed to be $22,000?
November 11, 2020 at 9:22 am
The question asks for budget profit statements. The budgeted fixed overheads are 20,000 and (by definition) will not change with the level of activity.
With absorption costing we will absorb $22,000 but then have the adjustment for over-absorption because the budget figure should stay at $20,000.
October 14, 2020 at 2:29 pm
Hello there sir.
1) In the first exercize, if the actual fixed overhead is not mentioned, you take the budgeted fixed overhead as the Actual ?
Reason: In the second exercize, the actual fixed overhead was mentioned, so I observed you did not consider the budgeted fixed overhead as the actual this time around -like you did so for the first exercize.
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