Page 157 - F2 - MA Integrated Workbook STUDENT 2018-19
P. 157
Accounting for overheads
Test your understanding 6
Production overhead in department A is absorbed using a predetermined rate
per machine hour. Last period, the production overhead in department A was
under-absorbed.
Which of the following situations could have contributed to the under-
absorption? (Tick all that apply)
The actual production overhead incurred was lower than budgeted
The actual production overhead incurred was higher than budgeted
The actual machine hours were lower than budgeted
The actual machine hours were higher than budgeted
Test your understanding 7
A management consultancy recovers overheads on chargeable consulting
hours. Budgeted overheads were $615,000 and actual consulting hours were
32,150. Overheads were under-recovered by $35,000.
If actual overheads were $694,075, what was the budgeted overhead
absorption rate per hour?
A $19.13
B $20.50
C $21.59
D $22.68
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