Unit 6, absorption costing

anthony_12c

hey, looking for help with unit 6, costing, osborne book question 5.6. About two different methods by which overheads can be absorbed and calculating the over head absoprtion rate. It gives you total production overhead figure, Direct labour £ figures for the three cost centres, direct materials £ figures, no. prod line employess, machine hours, units produced and states they work 35 hour week. Any help would be much appreciated.

mikes

Hi Anthony, I'm looking at the book. What question is it exactly that you want help on. Q5.6 is asking about the partners OAR, whilst working 35 Hrs and 37 hrs. Whilst the questions about the departments appear on other questions.

mally

anthony_12c wrote: »

hey, looking for help with unit 6, costing, osborne book question 5.6. About two different methods by which overheads can be absorbed and calculating the over head absoprtion rate. It gives you total production overhead figure, Direct labour £ figures for the three cost centres, direct materials £ figures, no. prod line employess, machine hours, units produced and states they work 35 hour week. Any help would be much appreciated.

Dont have the book at hand, but would suggest that the two methods are:
1) total production overhead figure divided by machine hours = OH abs rate per machine hr.
2) total production overhead figure divided by (TOTAL LABOUR HOURS - no. employees x 35hrs) = OH abs rate per direct labour hr.