Chapter 4 - Overhead Absorption Calculations

Question 1

Overhead absorption calculations

What is the calculation for Overhead Absorption Rate ?

Answer 1

OAR = Total budgeted cost centre overheads / Total planned work in the cost centre

Question 2

Overhead absorpiton calculations

What is the calculation for cost per direct labour hour ?

Answer 2

Cost per direct labour hour = Total cost centre overheads / Total direct labour hours (In cost centre)

Question 3

Overhead absorpiton calculations

What is the calculation for cost per machine hour ?

Answer 3

Cost per direct labour hour = Total cost centre overheads / Total machine hours (In cost centre)

Question 4

Overhead absorpiton calculations (Service sector)

What is the calculation for cost per hour of chargeable time ?

Answer 4

cost per hour of chargeable time = Total cost centre overheads / Total chargable hours (In cost centre)

Question 5

Overhead absorpiton calculations (Service sector)

What is the calculation for cost per mile traveled ?

Answer 5

cost per mile traveled = Total cost centre overheads / Total miles traveled (In cost centre)