Accounting Multiple Choice Question – 21 March 2022

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A company uses a machine hour basis to absorb its overheads.

The following information is provided for its last period.

                                                                        actual              budgeted
  • overheads £299,000 £350,000
  • machine hours 46,000 50,000

Which statement regarding overheads is correct?

Select ONE answer:

  1. They were over absorbed by £23,000.
  2. They were under absorbed by £23,000.
  3. They were over absorbed by £51,000.
  4. They were under absorbed by £51,000.

Show your workings to arrive at your answer, and explain and justify your reasons:

……………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………………

This multiple-choice question is suitable for Accounting KS5 classes.

The answer is 1

  1. Correct ==> £350,000 / 50,000 hours = £7 * 46,000 hours = £322,000 – £299,000 = £23,000
  2. Not correct
  3. Not correct
  4. Not correct

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