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September 22, 2021 at 5:16 pm
Hi sir why didn’t you use the fixed cost of 315,500$ to calculate the over or under absorption for FC? I’m confused because In the first example you said to find out Fixed overheads used we take 11000×2 and compare to the 20,000. But to find out the overhead used in this one, don’t we do this 78000×4 and then minus from the 320,000??????????
John Moffat says
September 23, 2021 at 8:42 am
In the first example we were preparing a budgeted profit statement and the budgeted fixed overheads were $20,000. In the second example we are comparing with what actually happened which was that fixed overheads were actually $315,000.
March 6, 2021 at 6:22 am
Greetings. When in the beginning you carry out the quick calculation of profit (9,000 x (35-27) = 72,000). The cost card used in the calculation uses the the oar based on the original budgeted hours of 10,000, and not 11,000 adulteration, so why is the answer not directly 74,000 here, which you get later after making adjustments to the workings.
March 6, 2021 at 5:50 am
For the workings in Ex1, why did you take the budgeted fixed overhead (20,000) and call it actual fixed overhead in the workings, thus leading the answer to be termed as an over absorption.
February 13, 2021 at 11:22 am
February 14, 2021 at 8:29 am
Thank you for your comment 🙂
February 6, 2021 at 1:54 pm
Thank you so much for those lectures!
I’m planning to sit on exam March 2021!
Are those lectures up to date please?
It’s easy study with your lectures rather than massive amounts of information in BPP text book!
Thank you on advance ?
February 6, 2021 at 5:06 pm
Our lectures are always up to date for the current syllabus (and the syllabus will not be updated until after the June 2021 exams).
January 28, 2021 at 6:13 am
Why there is no practise question for chapter 9
January 28, 2021 at 8:52 am
Because most exam question test Chapters 9 and 10 together, so the test after Chapter 10 does this. You will find it is the same for questions in your Revision Kit.
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?
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
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 ?
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.
March 6, 2021 at 7:45 am
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
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