Day: October 3, 2022

The following figures are given for a factory’s overheads and machine hours worked.

• budgeted = machine hours – 122,000 hours & total overhead costs – £268,400 & overhead absorption rate – £2.20
• actual = machine hours – 116,000 hours & total overhead costs – £261,000 & overhead absorption rate – £2.25

What was the under- or over-absorption of overhead for the quarter?

Select ONE answer:

1. £5,800 under-absorbed
2. £5,800 over-absorbed
3. £7,400 under-absorbed
4. £7,400 over-absorbed

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 – (122,000 hours – 116,000 hours) = 6,000 hours * £2.20 = £13,2000 – (£268,4000 – £261,000)
2. Not correct
3. Not correct
4. Not correct

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