Factory data: Budgeted production 10,000 units; Budgeted overheads 50,000; Actual overheads 60,000; Under-absorption 5,000. What was the actual production?

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SSC Financial and Cost Accounting P-1 QUESTION #6123

Question 1

Factory data: Budgeted production 10,000 units; Budgeted overheads $50,000; Actual overheads $60,000; Under-absorption $5,000. What was the actual production?

9,000 units✔️
9,167 units
11,000 units
13,000 units

Correct Answer Explanation

Option A (9,000 units) is correct.

OAR = $50,000 ÷ 10,000 = $5 per unit

Under-absorption = Actual overheads − Absorbed overheads

$5,000 = $60,000 − (Actual units × $5)

Actual units = $55,000 ÷ $5 = 9,000 units

More Options