A company uses an overhead absorption rate of $3.50 per machine our, based on 32,000 budgeted machine hours for the period. During the same period the actual total overhead expenditure amounted to $108,875 and 30,000 machine hours were recorded on actual production.

By how much was the total overhead under or over absorbed for the period?

A company has the following actual and budgeted data for year 4.

Overheads are absorbed using a rate per unit, based on budgeted output and expenditure.

Using the drop down list select, how much the fixed production overhead was under or over absorbed.

Which of the following would be the most appropriate basis for apportioning machinery insurance costs to cost centres within a factory?

The following data is available for period 9.

What would be the profit for period 9 using marginal costing?

Budgeted information relating to two departments in a company for the next period is as follows.

Individual direct labour employees within each department earn differing rates of pay, according to their skills, grade and experience.

What is the most appropriate production overhead absorption rate for department 1?

In a period where opening inventories were 15,000 units and closing inventories were 20,000 units, a firm had a profit of $130,000 using absorption costing.

If the fixed overhead absorption rate was $8 per unit, the profit using marginal costing would be which of the following?

Based on the data above, and assuming that the budgeted overhead absorption rate was $32 per hour, what were the budgeted number of hours (to the nearest hour) budgeted to be worked?

______ hours

Cost and selling price details for product Z are as follows.

Budgeted production for the month was 5,000 units although the company managed to produce 5,800 units, selling 5,200 of them and incurring fixed overhead costs of $27,400.

What is the absorption costing profit for the month?

A factory consists of two production cost centres (P and Q) and two service cost centres (X and Y). The total allocated and apportioned overhead for each is as follows:

It has been estimated that each service cost centre does work for the other cost centres in the following proportions:

After the reapportionment of service cost centre costs has been carried out using a method that fully recognises the reciprocal service arrangements in the factory, what is the total overhead for production cost centre P?

Under absorption costing, the total cost of a product will include:

A company manufactures and sells a single product. For this month the budgeted fixed production overheads are $48,000, budgeted production is 12,000 units and budgeted sales are 11,720 units.

The company currently uses absorption costing.

If the company used marginal costing principles instead of absorption costing for this month, what would be the effect on the budgeted profit?

A company produces and sells a single product whose variable cost is $6 per unit.

Fixed costs have been absorbed over the normal level of activity of 200,000 units and have been calculated as $2 per unit.

The current selling price is $10 per unit.

How much profit is made under marginal costing if the company sells 250,000 units?

Last month a manufacturing company's profit was $2,000, calculated using absorption costing principles. If marginal costing principles has been used, a loss of $3,000 would have occurred. The company's fixed production cost is $2 per unit. Sales last month were 10,000 units.

What was last month's production (in units)?

The following data is available for a paint department for the latest period.

Which of the following statements is correct?

CTF Co has two service centres serving two production departments. Overhead costs apportioned to each department are as follows.

The business uses the step down method of apportionment.

After the apportionment of the service centres to the production departments, what will the total overhead cost be for the mixing department?

A company has over-absorbed fixed production overheads for the period by $6,000. The fixed production overhead absorption rate was $8 per unit and is based on the normal level of activity of 5,000 units. Actual production was 4,500 units.

What was the actual fixed production overheads incurred for the period?

HMF Co produces a single product. The budgeted fixed production overheads for the period are $500,000. The budgeted output for the period is 2,500 units. Opening inventory at the start of the period consisted of 900 units and closing inventory at the end of the period consisted of 300 units.

If absorption costing principles were applied, the profit for the period compared to the marginal costing profit would be which of the following?

The following data is available on the production and sales for the first three years of a company’s new product.

Variable costs per unit, selling price and total fixed costs per year were constant over the three-year period. The company is considering the use of either marginal or absorption costing.

Which of the following statements is/are true?

1. Absorption costing will show a lower profit than marginal costing in Year 1
2. Marginal costing will show a lower closing inventory valuation than absorption costing in Year 2
3. Total profit over the three-year period will be the same under both methods

Last month, when a company had an opening inventory of 16,500 units and a closing inventory of 18,000 units, the profit using absorption costing was $40,000. The fixed production overhead rate was $10 per unit.

What would the profit for last month have been using marginal costing?

$_______

A company has the following actual and budgeted data for year 4.

Overheads are absorbed using a rate per unit, based on budgeted output and expenditure.

What was the fixed production overhead absorbed amount during year 4? $_________

A company’s total operating cost is semi variable. It flexes its profit budget from an output level of 1,000 units to an output level of 2,000 units?

Which of the following statements is true?

CTF Co has two service centres serving two production departments. Overhead costs apportioned to each department are as follows.

The business uses the direct method of apportionment.

After the apportionment of the service centres to the production departments, what will the total overhead cost be for the mixing department?

A company uses standard absorption costing to value inventory. Its fixed overhead absorption rate is $12 per labour hour and each unit of production should take four hours. In a recent period where there was no opening inventory of finished goods, 20,000 units were produced using 100,000 labour hours. 18,000 units were sold. The actual profit was $464,000.

What profit would have been earned under a standard marginal costing system?

A company absorbs overheads on machine hours. In a period, actual machine hours were 22,435, actual overheads were $496,500 and there was over absorption of $64,375.

What was the budgeted overhead absorption rate per machine hour (to the nearest $)?

$ ________

A company uses a blanket overhead absorption rate of $5 per direct labour hour. Actual overhead expenditure in a period was as budgeted.

The under/over absorbed overhead account for the period have the following entries:

Production overhead control account

Which of the following statements is true?

Which of the following are acceptable bases for absorbing production overheads?

1. Direct labour hours
2. Machine hours
3. As a percentage of the prime cost
4. Per unit

Cost and selling price details for product Z are as follows.

Budgeted production for the month was 5,000 units although the company managed to produce 5,800 units, selling 5,200 of them and incurring fixed overhead costs of $27,400.

What is the marginal costing profit for the month?

Based on the data above, what is the machine hour absorption rate (to the nearest $)?

Over-absorbed overheads occur when ________________

A company has the following budgeted costs and revenues:

In the most recent period, 2,000 units were produced and 1,000 units were sold. Actual sales price, variable production cost per unit and total fixed production costs were all as budgeted. Fixed production costs were over-absorbed by $4,000. There was no opening inventory for the period.

What would be the reduction in profit for the period if the company has used marginal costing rather than absorption costing?

Budgeted information relating to two departments in a company for the next period is as follows.

Individual direct labour employees within each department earn differing rates of pay, according to their skills, grade and experience.

What is the most appropriate production overhead absorption rate for department 2?

A company has established a marginal costing profit of $72,300. Opening inventory was 300 units and closing inventory is 750 units. The fixed production overhead absorption rate has been calculated as $5/unit.

What was the profit under absorption costing? $________

Consider the following statements, regarding the reapportionment of service cost centre overheads to production cost centres, where reciprocal services exist.

Which TWO statements are correct?

Factory overheads can be absorbed by which of the following methods?

1. Direct labour hours
2. Machine hours
3. As a percentage of prime cost
4. $x per unit

A company absorbs fixed production overheads in one of its departments on the basis of machine hours. There were 100,000 budgeted machine hours for the forthcoming period. The fixed production overhead absorption rate was $2.50 per machine hour.

During the period, the following actual results were recorded:

What was the fixed production overhead under/over absorption amount?

The following extract of information is available concerning the four cost centres of EG Co.

The overhead cost of the canteen is to be re-apportioned to the production cost centres on the basis of the number of employees in each production cost centre.

After the re-apportionment, what is the total overhead cost of the packing department, to the nearest $?

A company operates a standard marginal costing system. Last month its actual fixed overhead expenditure was 10% above budget resulting in a fixed overhead expenditure variance of $36,000.

What was the actual expenditure on fixed overheads last month?

The production overhead control account for R Co at the end of the period looks like this.

Production overhead control account

Which TWO of the following statements are correct?

A company manufacturers two products, X and Y, in a factory divided into two production cost centres, Primary and Finishing. The following budgeted data are available:

Budgeted production is 6,000 units of product X and 7,500 units of product Y. Fixed overhead costs are to be absorbed on a direct labour hour basis.

What is the budgeted fixed overhead cost per unit for product Y?

In a period, a company had opening inventory of 31,000 units and closing inventory of 34,000 units.
Profits based on marginal costing were $850,500 and on absorption costing were $955,500.

If the budgeted total fixed costs for the company was $1,837,500, what was the budgeted level of activity in units?

Which of the following is correct when considering the allocation, apportionment and reapportionment of overheads in an absorption costing situation?

The overhead absorption rate for product T is $4 per machine hour. Each unit of T requires 3 machine hours. Inventories of product T last period were:

Compared with the marginal costing profit for the period, the absorption costing profit for product T will be which of the following?

Which TWO of the following statements about predetermined overhead absorption rates are true?

A company had opening inventory of 48,500 units and closing inventory of 45,500 units. Profits based on marginal costing were $315,250 and on absorption costing were $288,250.

What is the fixed overhead absorption rate per unit?

An accountant is using the repeated distribution method to reapportion service department costs. The following table shows the work she has done so far. Figures that are yet to be calculated are shown as “???”

What is the total production overhead for production department 1 after the remaining reapportionment of the overheads of service department X?

A company which uses marginal costing has a profit of $37,500 for a period. Opening inventory was 100 units and closing inventory was 350 units.

The fixed production overhead absorption rate is $4 per unit.

What is the profit under absorption costing?