
The following information is available:
overhead cost £ budget 60,000 actual 66,000
direct labour hours budget 30,000 actual 35,000
Overheads are absorbed on the basis of direct labour hours.
What was the amount of over absorption or under absorption of overheads?
Select ONE answer:
- £4,000 over
- £4,000 under
- £6,000 over
- £6,000 under
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
- Correct – £60,000 / 30,000 hours = £2 per hour * 35,000 hours = £70k – £66k actual o/h ==> £4k over-absorption
- Not correct
- Not correct
- Not correct
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