Page 10 - P1 Integrated Workbook STUDENT 2018 - Copy
P. 10
Chapter 1
3.2 The overhead absorption rate (OAR)
This is calculated as:
Budgeted overheads
OAR = ––––––––––––––––––––––––––
Total budgeted absorption basis
It will then be charged to each product based on the amount of usage of the activity
measure used as the absorption basis.
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