1. What is an overhead absorption rate used for?
2. A cost centre has an OAR of $5 per hour for a budgeted level of 2000 hours. However, for the period, the actual hours was 10% higher than budgeted and the actual overhead was $17000. The OH was:
3. Company A absorbs OH based on machine hours. In a period where there were 5,000 machine hours, Actual OH was 120,000 and there was 20,000 under-absorption. What was the OAR?
4. For the upcoming period, MHS PLC has identified the following information;Budgeted labour hours : 5000
Budgeted Overhead : $300,000
Expected idle labour hours : 1000
What will be the Overhead absorption rate based on labour hours?
5. The following information is available for the upcoming period for KRF PLC.Factory rental $390,000 (Apportion to Assembly, Finishing and maintenance)
Cleaning liquids $5,000 (allocated to Maintenance)
Factory space is used up as follows;
Assembly 6000 sq.ft.
Finishing 4000 sq.ft.
Maintenance 3000 sq.ft.
Calculate the overhead cost for maintenance.
6. If actual overheads were $320,000 and $20,000 overabsorbed for a total of 15,000 hours, what is the budgeted overhead absorption rate?
7. An accountancy firm has tax, audit and consulting divisions. Additionally, there is Human Resources and IT as supporting divisions. What is the most suitable method of charging the overhead costs(select all that apply)?A. Allocation
8. JG PLC has 3 production departments, namely Assembly, Painting and Finishing and three service departments, namely Canteen, Staff Welfare and Maintenance. Which of the following are costs that will be commonly shared among these departments(select all that apply)?A. Rent for factory floor
B. Delivery charges for production raw materials
C. Cleaning liquid costs
D. Security guard salaries
The following information relates to questions 9 & 10
The following information is available with regards to HR PLC.
Rent : $500,000
Heating and Lighting : $45,000
Supervisor 1 salary : $10,000
9. What is the most appropriate base for apportioning the supervisor salary?
10. If Heating and lighting consists of $5000 of a fixed cost and $20 per unit consumed, for a total of 2,000 units, how much will be the overhead allocated to Assembly which consumed 700 units?