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Dear all,
I have already completed a mock test of F2 on opentution. However, I can’t understand this answer. Who can explain to me?A business absorbs its fixed production overheadson the basis of labour hours worked.
The following data is available:
Budgeted fixed overheads: $216,00
Budgeted labour hours: 114,000
Actual fixed overheads: $235,200
If there was an over-absorption of fixed overheads of 16,800, how many labour hours were actually worked?My answer is 168,000, but the key is 156,600.
I did like that:
OAR = $216,000/114,000 = $1.5
Labour hours actually worked is (235,200+16,800) / 1.5 = 168,000So, what did i do wrong?
Thanks so much!!!
Your answer is correct, and I do apologise that there was an error in the test – it has now been corrected.
(For the benefit of anyone else reading this, Tanhia has made a little typing error in her question – the budgeted labour hours were 144,000, not 114,000)
@johnmoffat said:
Your answer is correct, and I do apologise that there was an error in the test – it has now been corrected.(For the benefit of anyone else reading this, Tanhia has made a little typing error in her question – the budgeted labour hours were 144,000, not 114,000)
To John Moffat: Thank you very much!!!
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