GemmaLouise Registered Posts: 56 Regular contributor ⭐
I am looking at December 05
Task 1.1 c - reconciling fixed overheads -which is fine

When i came to work out fixed Overheads absorbed, in previous examples i have taken the OAR fr hours etc and times this by the actual units.

If u did this in this example it would be
600000 x 12 = way to much

so to get to 72000 you have to take the cost which is 120/1000 and x 600000

why is this - this is the unit oar?!?!!!??!?!?

any help would be much appreciated!!!



  • wolfe
    wolfe Registered Posts: 121 Dedicated contributor 🦉
    the oar / newspaper given £120 is for every 1,000 newspapers.
    usually the cost card is given for one unit of a product here its for 1000 units of a product

    so 600,000 newspapers/1,000 newspapers= 600 cycles of 1000 newspapers
    600 x £120 =£ 72,000
  • Tina Sparkles
    Tina Sparkles Registered Posts: 17 New contributor 🐸
    Pev dec 06

    Please can anyone look at pev DEC 06Section 1 Task b viii the model answer is 210 adverse but i think it should be favourable can anyone help???
  • swampy1901
    swampy1901 Registered Posts: 50 Regular contributor ⭐
    This question is one of the easiest of them all (for me that is!!) cos I have problems with capacity/efficiency variances and there are next to no calculations involved.
    But we are told that standard hours are 28000 and that actual hours are 27930. But it took longer to make less product so it makes it unfavourable.
    28000 x £3 Absorption per hour = 84000 and 27930 x £3 Absorption per hour = 83790 Makes it £210 adverse.
    In other words the standard is worse than the actual cost making it negative.

    Does that make sense? When I give answers like that I pity the poor examiner who has to mark my papers!! :lol:

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