jackiepowell Registered Posts: 72 Regular contributor ⭐
Hi Guys

Just found out i have failed my AAT Exam Costing ECR sat in December!!

Gutted! I have failed on section 2!


Is there anyone else in the same boat as me?



  • Priya-p
    Priya-p Registered Posts: 53 Regular contributor ⭐
    i failed section 2 aswel!!!!! very annoyed!
    on top of that i failed section 2 in FRA
  • King of the Mountains
    King of the Mountains Registered Posts: 66 Regular contributor ⭐
    I passed! I am sooo happy, don't wanna think about marginal costing again!
  • King of the Mountains
    King of the Mountains Registered Posts: 66 Regular contributor ⭐
    I am sorry that you failed, I would be gutted. We sat the unit 7 simulation before half term and I sort of know that I failed that but at least I don't have to go to college on Wednesday having failed the ECR exam too. Don't know how I 'm going to re-sit it either cos I'm struggling with time for study and we are starting unit 5 on Wednesday.:001_unsure:
  • jackiepowell
    jackiepowell Registered Posts: 72 Regular contributor ⭐
    What happens now? I dont know what is the best way to study for it now, will be so hard to go back! :(
  • lewpylew
    lewpylew Registered Posts: 216 Dedicated contributor 🦉
    I am sorry that you both failed - I am expecting the same fate when I get my email......dreading it as like you it will be so hard to get back into the swing of things again! At least it is easier than FCA which I am really struggling with :001_unsure:
  • chemayne
    chemayne Registered Posts: 7 New contributor 🐸
    sorry to hear you have failed, i really thought i had failed my section 2 of ECR and FRA but have passed both, god knows how though, had really psyched myself up for re-sitting both
  • rachie332
    rachie332 Registered Posts: 1 New contributor 🐸
    Failed ECR

    I have failed too, only I failed on Section 1. Can anyone explain Absorption overheads etc to me and make me understand it, as my lecturer got me lost completely!!:confused1:
  • SandyHood
    SandyHood Registered, Moderator Posts: 2,034 mod
    Overheads are indirect costs. If you have a slice of toast for breakfast, the bread you put into the toaster is a direct cost but the heating of the room, the electricty used to toast the bread and the washing up of your plate afterwards are all indirect costs.

    If you wanted a marginal cost of your toast it would probably be the price of each slice of bread and any spreads you might have put on it.

    If you wanted an absorption cost you would need to add some sort of share of all the indirect costs needed to produce your toast.

    So absorption costing means finding the direct costs and adding a share of the production overheads needed to produce it.

    The traditional approach to finding the share of overheads starts with a budget. Typically this is given in a question.

    You look at the overhead costs in a factory and allocate them to the various cost centres. For example the total rent expense may be divided between the various departments on the basis of how much floor area each takes up.

    Once you've turned your overhead from expenses defined in terms of what you're buying (rent, insurance etc) into where they are being used (assembly dept, packaging, store etc) you then need to carry out a re-apportionment of the total costs in any departments where the products do not actually go (for example maintenace, or stores).

    Reapportionment is asimilar process to apportioning expenses. The maintenace team may traditionally spend 50% of their time in the assembly dept, 30% in packaging and 20% in cutting dept. So the total is divided up on that basis.

    By the time reapportionment is complete there is a total value for each department (or cost centre where the products are actually made).
    This should add up to the total of all the budgeted expenses.

    The method of charging this to the products is called absorption. It may be based on labour hours or machine hours. So if a department is quite labour intensive such as the department where cakes are iced then the overhead would be charged on the basis of budgeted labour hours.

    Let's imagine that the cake factory icing department has a budgeted overhead cost for 2008 of £300,000 and budgeted labour hours for that period are 120,000, then we would work out the overhead to charge on the basis of £300,000 divided by 120,000 hours = £2.50 per hour.

    That means that for every cake being iced by the department there will be an overhead cost of £2.50 for every hour over and above any direct costs for materials or for labour.
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