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Chapter 1 Costing

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA PM Exams › Chapter 1 Costing

  • This topic has 1 reply, 2 voices, and was last updated 7 years ago by John Moffat.
Viewing 2 posts - 1 through 2 (of 2 total)
  • Author
    Posts
  • October 4, 2017 at 4:54 am #409373
    Son
    Member
    • Topics: 7
    • Replies: 5
    • ☆

    Hi, Sir
    I have a question want to ask you. Below is the question:
    F co operates an activity based costing system to attribute its overhead costs to costing object. Its year ends at 30 June 20X2, the company expected to place a total of 3250 purchase orders at a total costs of $97,500. This activity and related costs were budgeted to occur at a constant rate , which is divided into 13 four-week period.
    During the control period 10, a total of 267 purchase orders were placed at a total costs of $10,146..
    What was the under recovery of these costs for control period 10?

    I calculated the result was $2,136 which was based on the number of purchase orders to calculate the absorption rate. But the answer was $2,646 which is based on the number of weeks in the year. Please help me to answer! Thank you so much!

    October 4, 2017 at 7:30 am #409399
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54684
    • ☆☆☆☆☆

    It is because the question says that the related costs were budgeted to occur at a contact rate divided into 13 periods (not that they are basing on the actual number of orders). So they will have budgeted on absorbing 97,500/13 = 7,500 per period.

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    Posts
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  • The topic ‘Chapter 1 Costing’ is closed to new replies.

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