Is there a mistake on the AAT's previous papers on Under/over absorption???

System
System Posts: 100,534 🤖 Admin 🤖
edited June 18 in AAT student discussion
I am really struggling with remembering when a value is an under or over absorption!!!

When i have tried to do the past papers that hasnt helped either!

In Dec 04. Q1.5.b.i
The Budgeted value is 16,800 and the actual is 17,200 and AAT say this is Over absorbed

In Dec 05. Q1.5.b.i
The budgeted value is 51,000 and the actual is 55,000 and the AAT say it is Under absorbed...

I dont get it, in both instances the Actual is higher than the budgeted so am i right in thinking they should both be Under absorptions??? AM i right in thinking that if the budgeted is higher than the actual, then its an Over absoption because we have over budgeted, and if he actual is higher than the bidgeted then its an under absorption as we have under budgeted???

In desperate need of help.. the exam is tomorrow!

Comments

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Is there a mistake on the AAT's previous papers on Under/over absorption???

    i thought that as well and in my BPP book it says to remember NO PU (negative - over, Positive Under)

    but when i apply that to the question it is wrong.

    Tracy
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Is there a mistake on the AAT's previous papers on Under/over absorption???
    In Dec 04. Q1.5.b.i
    The Budgeted value is 16,800 and the actual is 17,200 and AAT say this is Over absorbed
    Actual labour hours worked 4,200
    The OAR in molding is £4.20

    So the overhead absorbed was be £17,640

    The actual cost was £17,200

    I agree with the AAT answer £440 was overabsorbed.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Is there a mistake on the AAT's previous papers on Under/over absorption???

    The key to overhead absorption is not the budgeted cost

    Absorb the OAR (calculated using the budgeted cost) using the actual hours worked

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