Cost and Rev - Overhead absorption rate

Hi again,
I just need this clearing up for me. My book has shown the Overhead Absorption rate as being the overheads / budgeted hours and overheads / actual hours.

Which one is correct? Actual or budget?
Thanks

Comments

  • amyjayne27
    amyjayne27 Registered Posts: 314
    Hi Tjcgti,

    I am also doing this unit at the moment. I may be wrong but I think to calculate OAR you use budgeted/expected hours. Then to calculate under/over absorption you then take into account the actual hours.

    Someone please correct me if I am wrong but this is what I think is right.

    Many thanks

    Amy
  • Tjcgti
    Tjcgti Registered Posts: 40 ? ? ?
    Hi Amy,

    I think your right there actually as that make sense. I thought it was one or the other and that you had to use one of them only.

    OAR = overheads / Budget or expected hours

    Under/over absorption = overheads / Actual hours

    Thanks for answer. Going over everything today as exam tomorrow. Have you booked yours at all?
  • amyjayne27
    amyjayne27 Registered Posts: 314
    No problem. Yeah i have booked mine for next Thursday and am very nervous! Good luck for your exam tommorow, I'm sure you will be fine.

    Thanks,

    Amy
  • Tjcgti
    Tjcgti Registered Posts: 40 ? ? ?
    amyjayne27 wrote: »
    No problem. Yeah i have booked mine for next Thursday and am very nervous! Good luck for your exam tommorow, I'm sure you will be fine.

    Thanks,

    Amy

    Thanks! Well I somehow passed the example CBA on website so must be doing something right even though half the time I didn't have a clue.

    Can't wait to pass (fingers crossed)

    Good luck with yours to
  • amyjayne27
    amyjayne27 Registered Posts: 314
    How did you get on? Hope its good news!

    Amy
  • Tjcgti
    Tjcgti Registered Posts: 40 ? ? ?
    amyjayne27 wrote: »
    How did you get on? Hope its good news!

    Amy

    It is thanks! I did it. Passed it. Completed it. It really was not too bad after doing the ECR online practice paper as it prepares you loads for the format they use.
    When doing the practice exam I basically did every question and did a print screen of what I put and compared it to the answers. I personally think that got me through the exam. My tip of the day...

    Your turn to pass now :) finding it ok?
  • Tjcgti
    Tjcgti Registered Posts: 40 ? ? ?
    Oh and thanks for the last minute help from people!
  • amyjayne27
    amyjayne27 Registered Posts: 314
    A massive congrats! Bet your well pleased. This may sound really really thick but what do you mean by print screen? I know how to do that but not sure how you compare it with the answers? Do you paste the print screens onto word or something? Are you allowed to do that?

    Really hope I pass, only just getting my head around limiting factors and the exams a week tommorow!

    Thanks and congrats again,

    Amy
  • Tjcgti
    Tjcgti Registered Posts: 40 ? ? ?
    amyjayne27 wrote: »
    A massive congrats! Bet your well pleased. This may sound really really thick but what do you mean by print screen? I know how to do that but not sure how you compare it with the answers? Do you paste the print screens onto word or something? Are you allowed to do that?

    Really hope I pass, only just getting my head around limiting factors and the exams a week tommorow!

    Thanks and congrats again,

    Amy

    I am pleased :)
    So I just print screen on each question so it showed what answers I put and pasted them onto word. Then printed them out and compared them to the answers that were online.
    Well I don't think theres a problem with it as its a practice exam paper and its just the same with paper exam papers.

    You'll be fine. Prepare and it will be a breeze.
  • amyjayne27
    amyjayne27 Registered Posts: 314
    Ooh that is good advice, I didnt know there were answers for the practice CBA? Could you tell me where this is? Many thanks

    Amy
  • Tjcgti
    Tjcgti Registered Posts: 40 ? ? ?
    amyjayne27 wrote: »
    Ooh that is good advice, I didnt know there were answers for the practice CBA? Could you tell me where this is? Many thanks

    Amy

    You have PM.
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