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absorbed overheads

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › absorbed overheads

  • This topic has 1 reply, 2 voices, and was last updated 3 years ago by John Moffat.
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  • January 2, 2022 at 2:35 pm #645190
    AlinaaF
    Participant
    • Topics: 31
    • Replies: 17
    • ☆

    SIR Could you please tell me what is under/over absorbed fixed overhead and why causes it and how do we calculate it?

    Is it the correct way to calculate such as:

    actual fixed overhead incurred
    standard cost with actual production (actual quantity x standard cost per unit)
    under/(over) absorbed overhead

    (actual fixed overhead incurred will be given in the question)

    January 2, 2022 at 4:15 pm #645195
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54701
    • ☆☆☆☆☆

    What you have written is correct and the actual will be given in the question.

    It occurs because units produced at charged at the standard overhead absorption rate, but the actual total overheads might be difference.

    I do explain this in my free lectures working through Chapter 9 of our lecture notes.

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