Page 40 - 5.2 i. Manac Costing ITC Summarised Notes
P. 40

ITC EXAM PREP




                           Costing variances – example 1









             At beginning of period:




             Allocation rate                            = Budgeted overhead/ Normal capacity


                                                        = 200 000 / 20 000 units

                                                        = R10 per unit                                          Units, machine
                                                                                                                 hours, labour
                                                                                                                   hours, etc.


             During period:




             Absorbed overhead  = Allocation rate x actual production


                                                        = R10 x 21 000 units


                                                        = R210 000



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