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