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Hi
I would like to ask that fixed cost are calculated on the basis of budgeted activity rather than actual but does this logic apply to OH absorption too?A company uses an overhead absorption rate of $3.50 per machine hour, based on 32,000 budgeted machine hours for the period.
During the same period, the actual total overhead expenditure amounted to $108,875 and 30,000 machine hours were recorded on actual production.
By how much was the total overhead under or over absorbed for the period?The total amount absorbed is the actual hours worked, charged at the absorption rate (the absorption rate is always calculated on the budgeted figures).
You really should watch our free lectures. They are a complete course for Paper F2 and cover everything needed to be able to pass the exam well.
Yes i think i need to revise f2 as i seem to have forgotten even the basics
Thanks JohnDon’t worry too much – not much of F2 is asked in F5 (even though it is supposed to be assumed knowledge 🙂 )
If you watch our F5 lectures then everything you need from F2 is revised in the lectures. Our F5 lectures are a complete course and cover everything needed to pass the exam.
Do download our free Study Guide for F5 – it has links to all the different things we offer.
Thanks.
Btw you are a great teacher,i love how you keep emphasising not to just learn the formula but to understand the logic.:)
Cheers
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