A cost centre is charged with the following actual overhead costs for a period:Allocated costs$28,720 Apportioned costs $10,260 Overheads were absorbed in the cost centre over the period on 1,760 actual labour hours at a predetermined absorption rate of $21·50 per hour. Actual labour hours worked in the period were 90 hours above budget.
What was the overhead over/under absorption in the cost centre?
Total OH = 28720 + 10260 = 38980
Budgeted OHAR = 21.50
Overheads are absorbed over 1760 hrs, so 21.5 x 1760 go into production = 37840.
Under absorbed = 38980 – 37840 = 1140
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