Panic ECR OAR question

System
System Posts: 100,534 🤖 Admin 🤖
edited June 18 in AAT student discussion
I have been doing all the past papers and now have come across what I think is an error in the answers for ECR paper December 2004.
Can someone help me please as I am more confused now than every. The question relates to Task 1.5 &1.6 It asked you to work out the OAR of the cutting and finishing Dept’s which I did as follows:- £24000/9600 (budgeted hrs) = £2.50 and £21150/7050 (budgeted hrs) = £3.00

The actual hrs are 9250 & 7350 so I then calculated these figures.
9250 x £2.50 = £23125
7350 x £3.00 = £22050

Budgeted £24000
Actual £23125
Over absorbed = £875

Budgeted £21150
Actual £22050
Under absorbed = £900

In the answers the over and under are round the other way. Which is correct cause the same type of question is in the November 2004 ECR paper task 1.5 and I got that one right.

Please help!!

Comments

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Panic ECR OAR question

    This *is* a mistake in the answers - don't panic, you're right.

    Chris
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Panic ECR OAR question

    Cheers :D
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Panic ECR OAR question

    I thought that the £875 would be under absorbed as you have absorbed less than you budgeted for and that you over absorbed on the £900 as you absorbed more than you budgeted for.

    Help as now i am confused and want to check which is correct before the exam.

    Thanks
    Gem
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Panic ECR OAR question

    This is 1.5-1.6 on Dec 03
    1.5
    (a) OAR cutting dept £2.50 per DLH

    (b) OAR finishing dept £3.00 per machine hr


    1.6 Overhead absorbed November
    (a)(i) cutting dept £2.50 x 9250 = £23,125.00

    (ii) finishing dept £3.00 x 7350 = £22,050.00

    (b) Under/Over absorbed overhead
    (i)cutting dept = £23,125 - £24,000 = £875 underabsorbed
    (ii) finishing dept = £22,050 - £21,150 = £900 overabsorbed

    (c) In the P and L credit Overs and debit unders

    NB
    I criticised this question to the then examiner. It is not realistic to have (as this question has in the additional data on page 7) Budgeted and Actual fixed production overheads as the same amount.

    Look at this
    (b) Under/Over absorbed overhead
    (i)cutting dept = £23,125 - £24,000 = £875 underabsorbed
    (ii) finishing dept = £22,050 - £21,150 = £900 overabsorbed
    The £24,000 is the ACTUAL overhead in the cutting dept and the £21,050 is the ACTUAL overhead in the finishing dept rather than budgeted - it is a fluke that the budget values care the same as the actuals

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