MA- Accounting For Overheads

What are the total overheads for production cost centre G after the reapportionment of all

service cost centre costs?

What is an overhead absorption rate used for?

• share out common costs over benefiting cost centres

• find the total overheads for a cost centre

• charge overheads to products

• control overheads

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?

• $122,400

• $124,716

• $126,000

• $127,000

A cost centre has an overhead absorption rate of $4.25 per machine hour, based on a

budgeted activity level of 12,400 machine hours.

In the period covered by the budget, actual machine hours worked were 2% more than the

budgeted hours and the actual overhead expenditure incurred in the cost centre was

$56,389.

What was the total over or under absorption of overheads in the cost centre for the period?

• $1,054 over

• $2,635 under absorbed

• $3,689 over

• $3,689 under absorbed

Which of the following situations would cause overheads to be over-absorbed?

• when absorbed overheads exceed actual overheads

• when absorbed overheads exceed budgeted overheads

• when actual overheads exceed budgeted overheads

• when budgeted overheads exceed absorbed overheads

The management accountant's report shows that fixed production overheads were over-

absorbed in the last accounting period.

What is the combination that is certain to lead to this situation?

• production volume is lower than budget and actual expenditure is higher than budget

• production volume is higher than budget and actual expenditure is higher than budget

• production volume and actual cost are as budgeted

• production volume is higher than budget and actual expenditure is lower than budget

What would the accounting entries be for $10,000 of over-absorbed overheads?

• Dr

  Work-in-progress control account Cr Overhead control account

• Dr Statement of profit or loss

  Cr Work-in-progress control account

• Dr Statement of profit or loss

  Cr Overhead control account

• Dr Overhead control account

  Cr Statement Of profit or loss

What is the budgeted fixed overhead cost of a unit of Pye (to 2 decimal places)?

What is cost apportionment?

• The charging of discrete identifiable items of cost to cost centres or cost units

• The collection of costs attributable to cost centres and cost units using the costing

  methods, principles and techniques prescribed for a particular business entity

• The process of establishing the costs of cost centres or cost units

• The division of costs amongst two or more cost centres in proportion to the estimated

  benefit received, using a proxy, e.g. square metres

A law firm recovers overheads on chargeable consulting hours. Budgeted overheads were

$615,000 and actual consulting hours were 32,150. Overheads were under-recovered by

$35,000. Actual overheads were $694,075.

What is the budgeted overhead absorption rate per hour (to 2 decimal places)?

• $20.21

• $20.50

• $21.59

• $22.68