ECR Exam Paper December 2003

System
System Posts: 100,534 🤖 Admin 🤖
edited June 18 in AAT student discussion
Could somebody please help me with Task 1.6 (b). I think I've worked out that for the Cutting Department the budgeted overheads are £24,000 and the actual overheads are £23,125 and for the Finishing Department the budgeted overheads are £21,150 and the actual overheads are £22,050. So why are the overheads UNDER-absorbed £875 for the Cutting Department and OVER-absorbed £900 for the Finishing Department? My answer is the other way around. I cannot figure it out. I've done this before and I've been able to understand it. Many thanks. Roz.

Comments

  • System
    System Posts: 100,534 🤖 Admin 🤖
    ECR Exam Paper December 2003

    i got stuck with this one and i think its a typo...<BR><BR>i did another paper and it was similar but this time i got the same answer as the answer sheet... i lust ignored it...<BR><BR>
  • System
    System Posts: 100,534 🤖 Admin 🤖
    ECR Exam Paper December 2003

    Unfortunately there is no typo error on the paper. The answer is in the text under additional data, the overhead that are allocated are based on budgeted and actual overhead incurred.<BR><BR>Actual <BR><BR>Cutting £24,000<BR>Finishing £21,150<BR><BR>Absorbed<BR>Cutting £23,125<BR>Finishing £22,050<BR><BR>Cutting Under (£875.00)<BR>Finishing Over £900<BR><BR>When you calculate the absorption you use the actual hours x by the predetermined absorption rate.<BR><BR>
  • System
    System Posts: 100,534 🤖 Admin 🤖
    ECR Exam Paper December 2003

    Thanks for your reply, but this has totally confused me. If, say, the actual amount is £24,000 and using the absorption rate the amount you absorbed is £23,125, wouldn't you have not absorbed enough and so it would be UNDER-absorbed by £875.00?? Help!
  • System
    System Posts: 100,534 🤖 Admin 🤖
    ECR Exam Paper December 2003

    That is correct as per my orginial message- under absorbed is £875.00, which means that your actuals are higher than your absorbed overheads.<BR><BR>Don't forget that you have to imagine that all the information is provided at the beginning of the month as budget data, in the real world you would never get the total value of overheads spot on. Its only at the end of the month you then adjust the under or over absorbed.<BR><BR>Also the only difference in these figures is the actual hours or machine time worked.<BR><BR><BR>Any adjustments that need to be made shoudl be eith DR or CR Profit and loss/ DR or CR Productions overheads account<BR>
  • System
    System Posts: 100,534 🤖 Admin 🤖
    ECR Exam Paper December 2003

    Im with you Roz<BR><BR>still think its a typo...<BR><BR>sorry petrolmonkey...!
  • System
    System Posts: 100,534 🤖 Admin 🤖
    ECR Exam Paper December 2003

    I apologise now if it is a typo but in previsous exams it will normally tell you the value of the actual overhead incirred and you would ave already the absorbed value.<BR><BR>Lets hope its clearly in this years exams or we will all be buggered.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    ECR Exam Paper December 2003

    Thanks to everyone that replied. I'll go with the majority that this is a typo. I would have appreciated the AAT publishing a correction so that we didn't have to spend so much time trying to figure this out!! Thank you all and good luck for the exams. Roz.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    ECR Exam Paper December 2003

    I agree with PetrolMonkey.<BR>Cutting is underabsorbed 875<BR>Finishing is overabsorbed 900
  • System
    System Posts: 100,534 🤖 Admin 🤖
    ECR Exam Paper December 2003

    i agree but the accounting entries dont make sense.....<BR><BR>or am i havin a blonde moment shazza...!

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