Overhead Absorption Rate

System
System Posts: 100,534 🤖 Admin 🤖
edited 10:30AM in AAT student discussion
<BR>Am i the only one to use the fixed overhead figure from the table (sommit like 313,000) to calculate the o/h absorption rates? <BR><BR>Everyone else in my class seems to have used the 'Total Overhead' figure of 400,000 in the question.<BR><BR>Hm..i'd appreciate it if i could get some feedback so i know i aint the only mug around to use that figure...<BR><BR>Thanks a bunch.<BR><BR>Ben<BR>

Comments

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Overhead Absorption Rate

    I used the 40000, but wanted to use the info from table as we have done in previous practise exam papers. But somehow I went for the 40000, not sure what possed me, but I hope it is the right answer!<BR><BR>Eve
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Overhead Absorption Rate

    I used the same figure as you, the one from the table on the other page.<BR><BR>used that as the one that was listed @ the approx 400,000 said total overheads and to get the absorption rate it is budgeted costs / budgeted hours.<BR><BR>But look as though that was wrong we should have the 400,000 on the page where the budgeted hours were. Nearly all of the people that i have asked has done it that way.<BR><BR>Dont' think that it explained it all that well<BR><BR>Do you think that we were right?
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Overhead Absorption Rate

    <BR>Hm...i was discussing this with my class mates who used the 400,000 and got a rate of 40. (i got 33.33 or something like that..) but the question wanted the 'fixed overhead' absop. rate. so i looked at the list and it said: 'total overheads' presumably including the variable aspects too. so i decided to go for the figure in the table - which is what i have always done in the past papers - as i thought this was the true 'fixed' overheads.<BR><BR>hm..i think we are right but i dont know...the majority seem to have used the 400,000.<BR><BR>i wouldnt mind knowing the answers...this is really bugging me. (too late now but..)<BR><BR>thanks for your comments.<BR><BR>Ben P
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Overhead Absorption Rate

    I used the figure in the table as well, as to get the budgeted OAR you should use the budgeted OH's. The £400,000 I assumed was the actual fixed overhead costs which I wold assume you would use to calculate the under/over absorbtion (although we were not asked to calc this figure).<BR><BR>I spoke to my tutor about this and he said that we should have used the £400,000 as it was a seperate department. I didn't think the question was very well worded at all and when I expressed my point he said that he could see my point then wasn't so sure himself.<BR><BR>Guess we will have to wait for the answers
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Overhead Absorption Rate

    I got 40 too. It was the 400,000 divided by the machine hours. The information given above was about a machine working 24 hours a day 7 days a week. So the most appropriate form of absorption would surely be on machine hours?<BR><BR>the budgeted machine hours were 10,000.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Overhead Absorption Rate

    <BR>Yeh i agree with the last part about dividing by machine hrs. i also used the 10,000. but i assumed 'total' overheads included fixed AND variable. we were only asked for the fxd o/h ab. rate. i.e. the total fixed overheads/machine hrs...hm.<BR><BR>good to get the views of other people. <BR>thanks,<BR>Ben P

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