ECR June 2004 task 1.3 and 1.4

podoli
podoli Registered Posts: 1 New contributor ?
could anyone please answer my questions on ECR June 2004 task 1.3 and 1.4
At task 1.3 allocation and apportionment of budget fixed overhead which I got them correct
Cutting dep: £6000pounds
Stitching dep £5400 pounds

Then at task 1.4 a) calculate the production overhead absorbed for May in the cutting Dep
3poundsx £2200hours= £6600
b) Calculate the under or over absorbed production overheads for May in the cutting Dep
the answer is £6600 pounds- £6200 pounds= £400 over
My question is : to work out (b)
why not £6600- £6000 or £ 6000-£6200
why don’t we use the figure from Task 1.3 as the budgeted fixed overhead?

thank you very much for your help.

Comments

  • SandyHood
    SandyHood Registered, Moderator Posts: 2,034
    Absorbed overhead

    Always compare actual overhead with the absorbed overhead.

    The budget has served its purpose, you used it to find the overhead absorption rate.

    overhead absorption rate x hours actually worked = absorbed overhead
    Sandy
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    www.sandyhood.com
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