[Rana Amr]

When ur closing Inventory > Opening Inventory then Ur AcP is greater then McP when ur Opening Inventory > Closing inventory then ur MCP is Greater then AcP

[Rana Amr]

As we know that

AR = Budgted overhead /Budgeted activity level

we also know fOR under/over absorbtion we use this formula

AR * Actual activity level = (xxx)

Actual overhead = (xxx)

UNDER/Over= (xxx)

if in question they give us amount of actual overhead and there would also be under over absorption then we would do 2 step

1) for under we should subtract the amount of under overhead from actual over head to get the value of overhead on our actual activity level

2) for overr we should add the amount of over value of overhead from actual over head to get the value of overhead on our actual activity leve

now comes towards your question

A cost centre uses a direct labour hour rate to absorb overheads. Data for the lastest period are as follows:
Budgeted overheard. $27760
Actual overheads. $23592
Actual direct labour hours. $4925
Overheads under absorbed. $937

AR * 4925 = 22655

Actual overhead = 23592

UNDER/Over= ( 937)

AR = 22655/4925

AR = 4.6

As we know that

AR = Budgted overhead /Budgeted activity level

Budgeted activity level = Budgted overhead/AR

Budgeted activity level = 27760/4.6

Budgeted activity level = 6035

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