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can you explain a little bit about the fixed o/h expenditure variance and actual fixed o/h variance
Confused a bit as to what figure to take?
In the question 1a I would have thought the answer was 17500 – 12500 =5000 under absorbed
In future please say which Revision Kit you are referring to (there are several ACCA approved publishers).
I assume you are meaning the BPP Revision Kit.The amount absorbed in the profit statement is always the actual production multiplied by the absorption rate.
The absorption rate (from the graph) is $2 per unit.
Therefore the amount absorbed is 7,500 x $4 = $15,000.
Since the actual overheads are $17,500 they have underabsorbed by the difference of $2,500.My free lectures on marginal and absorption costing will help you (the lectures are a complete free course for Paper F2 and cover everything needed to be able to pass the exam well).
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