Day: August 6, 2022

A company uses a predetermined direct labour rate of £5.40 per hour to absorb production overhead.

Each unit of product manufactured requires four direct labour hours.

The following information is available for a period:

• actual production overhead £518 400
• under-absorbed production overhead £32 400

What was the actual output of the product in the period?

Select ONE answer:

• 22 500 units
• 24 000 units
• 25 500 units
• 30 000 units

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 – £518,400 – £32,400 = £486,000 / £5.4 = 90,000 / 4 DLH ==> 22,500 units
2. Not correct
3. Not correct
4. Not correct

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