accounting for overheads

This topic has 5 replies, 2 voices, and was last updated 9 years ago by John Moffat.

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June 9, 2016 at 6:56 pm #321671
adarsh1997
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Dear sir,
I do have watched your lectures concerning accounting for overheads and I just want to know what is the difference between ” absorbed on a labour hour basis” and “absorbed per direct labour basis”?
Thanks in advance.
June 10, 2016 at 6:13 am #321823
John Moffat
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They are the same 🙂
June 10, 2016 at 9:07 am #321877
adarsh1997
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1.Direct labour = 15 minutes at $8 per hour (15 mins=0.25 hr)
Variable factory overhead =Absorbed at $14.00 per direct labour hour
Therefore, the amount for VFO is: 14/0.25 hrs
= $56
-Is my answer correct?
June 10, 2016 at 9:43 am #321886
John Moffat
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No.
How on earth can 0.25 of an hour be costing more than 1 hour costs ???
June 10, 2016 at 10:36 am #321911
adarsh1997
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ok….but what should be the answer?
June 10, 2016 at 3:48 pm #322038
John Moffat
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Why are you attempting questions for which you have no answer? You should be using a Revision Kit from one of the ACCA approved publishers – they have answers to all the questions!
Surely you can work out yourself the cost of 0.25 hours when 1 hour costs $14?
$3.50
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