• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
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
  • Search
  • Register
  • Login
  • ACCA Forums
  • Ask ACCA Tutor
  • CIMA Forums
  • Ask CIMA Tutor
  • FIA
  • OBU
  • Buy/Sell Books
  • All Forums
  • Latest Topics

Congratulations to Jamil from Pakistan and Jeeva from Malaysia - Global Prize winners!
see all ACCA December 2022 Genius Hunt Competition winners >>

Specially for OpenTuition students: 20% off BPP Books for ACCA & CIMA exams – Get your BPP Discount Code >>

ABC

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA PM Exams › ABC

  • This topic has 1 reply, 2 voices, and was last updated 1 year ago by John Moffat.
Viewing 2 posts - 1 through 2 (of 2 total)
  • Author
    Posts
  • August 1, 2021 at 8:50 am #629993
    lokeshdh00
    Participant
    • Topics: 111
    • Replies: 106
    • ☆☆☆

    In Q no. 2 of practice questions, It is shown that “Traditional costing technique causes undervalue or under-allocation to overheads of lower-volume products”

    Its obvious from example one of chapter 1 that traditional costing causes under allocation of overhead but What exactly causes the under allocation is it the cost driver. I wronged only this particular question as i thought it solely depends on cost driver as you provided explanation in example 1 And if cost driver is the one which decides cost allocation then less cost driver for low volume goods should not under allocate O/Hs right in traditional methord ? and if cost driver is unreasonably high for high volume cost then it should under allocate high volume products in traditional methord, isn’t that right? can you please explain this to me.

    August 1, 2021 at 3:40 pm #630046
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 51543
    • ☆☆☆☆☆

    Whatever the method of absorbing overheads is, the same total overheads will be absorbed. What changes is how they are absorbed per unit into different products.

    With traditional costing all units are costed using the same cost driver – usually labour hours or machine hours. And therefore the total absorbed into each product is not affected by the number produced of each product.

    As shown by the examples in Chapter 1, it is likely that a product with a low level of production is actually using more of a particular cost driver and therefore should be allocated more of the overheads.

  • Author
    Posts
Viewing 2 posts - 1 through 2 (of 2 total)
  • You must be logged in to reply to this topic.
Log In

Primary Sidebar

ACCA News:

 

ACCA My Exam Performance for non-variant Applied Skills exams is available NOW

NEW! Download the ACCA Pass Guide

FREE Verifiable CPD for ACCA Members

ACCA mock exams and debrief videos

ACCA Options:  “Read the Mind of the Marker” articles

Subscribe to ACCA’s Student Accountant Direct

Donate

If you have benefited from OpenTuition please donate.

ACCA CBE 2023 Exams

Instant Poll * How was your exam, and what was the result?

BT CBE exam was.. | MA CBE exam was..
FA CBE exam was.. | LW CBE exam was..

Specially for OpenTuition students

20% off BPP Books

Get BPP Discount Code

Latest comments

  • jcacca15 on PPE – Introduction – ACCA Financial Reporting (FR)
  • jcacca15 on PPE – Introduction – ACCA Financial Reporting (FR)
  • shazleen on ACCA AB Chapter 10 – Management – Questions
  • John Moffat on Introduction to Financial Accounting – ACCA Financial Accounting (FA) lectures
  • John Moffat on Linear Programming – Maximum contribution – ACCA Performance Management (PM)

Copyright © 2023 · Support · Contact · Advertising · OpenLicense · About · Sitemap · Comments · Log in


We use cookies to show you relevant advertising, find out more: Privacy Policy · Cookie Policy