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QRL uses a standard absorption costing system. The following details have been extracted
from its budget for April 20X7:
Fixed production overhead cost $48,000
Production (units) 4,800
In April 20X7 the fixed production overhead cost was under?absorbed by $8,000 and the fixed
production overhead expenditure variance was $2,000 adverse.
What was the actual number of units produced?
A 3,800
B 4,000
C 4,200
D 5,400i dont get the under absorbed part
Have you watched my free lectures on this?
The under or over absorption is the difference between the actual total fixed overheads and the amount absorbed (i.e. the actual production multiplied by the standard absorption rate).
Again, this is all explained in my lectures. The lectures are a complete free course for Paper MA and cover everything needed to be able to pass the exam well.
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