Home For AAT student members AQ 2016 Advanced Diploma in Accounting Management Accounting: Costing
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practice assessment 3, task 5 (b)

I don't understand how they get to the figure £1375. I thought it was £41250 - £38425 = £2825?

How do they get the figure £1375?


  • progmetalgodprogmetalgod Just Joined Registered Posts: 4
    I know this is an old question but thought I'd answer it for my own and perhaps other people's benefit:

    Answer to 5 (a) Machining budgeted O.A.R. is £14.50, which is required to answer (b).
    This is done by dividing the budgeted overheads of £38,425 by 2,650 budgeted machine hours.

    (b) £14.50 O.A.R. x 2,750 actual machine hours = £39,875
    Actual overheads £41,250 - absorbed £39,875 = an under-absorption of £1,375.

    I hope this helps someone. :-)
  • ClareJoClareJo Registered Posts: 11
    it helped me thanks
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