Level 3 Management Accounting: Costing assessment PAPER ONE TASK 5


I am currently working thought both past papers for management costings in preparation for my exam.

On practice paper 1 - Task 5 C).

I have attempted myself and also attempted to work back from the answer ( 14124 )

Can someone please explain how to get to the figure and why this is user absorbed.


  • RichardAAT
    RichardAAT Registered Posts: 15
    In the previous task you calculated the OAR: 25.16 which was based on assumption at the time, it was calculated on budgeted overheads and budgeted direct labour hours.
    Then you have the actual overheads which is 215404.
    to calculate the difference you need to take the actual direct labour hours and multiply by 25.16 to compare the figure.
    So 25.16*8000=201280
    The OAR was based on assumption so now you can see the difference when you compare this to you actual Overheads 215404 .
    Because the actual overheads is greater than 201280 which was calculated based on assumption it means was not absorb enough overheads.
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