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Question 1
a. Calculate five different overhead absorption rates for cost centre 17 based on the following budgeted data: [5]
Labour hours per period 1400
Total direct wages for period $3600
Total direct materials for period $7500
Total machine hours for period 2850
Total units produced for period 535
Total overheads for period $12900b. A cost unit has been produced in cost centre 17 and the following details recorded:
Direct materials used $16.50
Direct wages $17.50
Direct labour hours 5.5
Machine hours 8.5
Calculate the costs of this unit using each of the absorption bases calculated in part a. [5]c. What basis of overhead absorption would you recommend if you are informed that cost centre 17 comprises a number of numerically controlled machine tools with semi-skilled operators and that over a half of the cost centre’s overheads relate to machine depreciation? Give reasons. [5]
None of what you have written is examinable in Paper FM. Paper FM is financial management.
It is more Paper MA (was F2) although it would not be asked in this form in the exam.
Why are you attempting a question for which you do not have an answer? You should be using a Revision Kit from one of the ACCA Approved Publishers – they have answers and explanations.
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