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under absorption variance

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › under absorption variance

  • This topic has 1 reply, 2 voices, and was last updated 3 weeks ago by John Moffat.
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    Posts
  • July 20, 2022 at 2:37 pm #661441
    kashafaltaf500
    • Topics: 13
    • Replies: 6
    • ☆

    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 5,400

    i dont get the under absorbed part

    July 20, 2022 at 5:28 pm #661467
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 49974
    • ☆☆☆☆☆

    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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