Intermediate: Comments on overhead absorption rates and calculation of budgeted overheads Superdoop PLC is a manufactunng company
Question:
Intermediate: Comments on overhead absorption rates and calculation of budgeted overheads Superdoop PLC is a manufactunng company operating three production departments. Shown below are next year's budgeted manufacturing costs, per unit, for each of the three products manufactured by the company
Prime costs are variable. production overhead contains both fixed and variable elements.
The company operates a full absorption costing system and next year's budgeted overhead absorption rates, based upon next year's budgeted overheads and activity, are:
Next year's budgeted total direct wages for Department B, analysed by product are:
Stocks of work in progress are not carried.
Required:
(a) Describe the circumstances in which it would be appropriate to use each of the absorption methods indicated 1n the question.
(b) Calculate next year's total budgeted overheads for each of the three departments in Superdoop pic.
(c) Assume that, next year, the actual results are exactly as those predicted in the budget, except that production of Product Z is 200 units h1gher than that budgeted and, as a consequence, the overheads over-absorbed in the three departments are as follows:
Analyse the overheads incurred 1n Departments A and B between fixed and variable
Step by Step Answer:
