Page 167 - F2 - MA Integrated Workbook STUDENT 2018-19

Accounting for overheads

Test your understanding 5

(a) A

OAR = $148,750 / 8,500 = $17.50 per hour

(b) D

$

Overhead incurred 146,200

Overhead absorbed ($17.50 × 7,928) 138,740

Under-absorption 7,460

Test your understanding 6

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

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