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A company uses a standard absorption costing system. The following details have been extracted from its budget for April.
Fixed production overheads cost $48000
production 4800 unitsIn April the fixed production overheads cost was under absorbed by $8000 and the fixed production overhead expenditure variance was $2000 adverse.
the actual number of units produced was
A 3800 B4200 C 4800 D 5800I don’t know how to proceed with it ^^
firstly, find out the budget absorb rate=48000/4800=$10 per unit
then, assume x=actual units produced, $10 times x = actual overheads absorbedbudget is $48k, and variance is $2k adverse, indicates actual overheads is $50k
under absorbed by $8k, indicates actual overheads absorbed is $42k (=50-8)combine the two above, you’ll find x=4200 units
for for reference
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