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 Marginal costing and absorption costing

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Jocelyn Ting



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PostSubject: Marginal costing and absorption costing   Mon Jun 09, 2008 6:13 am

text book chapter 10,pg 143

Actual lvl of production(6000)is greater than the lvl of production used in calculating the OH absorption rate(5000).this leads to a situation of over-absorbed fixed production OH,which means that more production OH will have been absorbed into the cost of production that has been incurred during the period.

-why this will lead to over-absorbed fixed production OH?shouldn't it be under-absorbed fixed production OH?
coz the budgeted production lvl is lower than the actual production lvl..

-what is the difference btw 'absorbed' and 'incurred'?
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jeretang288
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PostSubject: Re: Marginal costing and absorption costing   Mon Jun 09, 2008 9:20 am

Hi...jocelyn Ting...I had read your question..I found that we must said that the 5000 must set as a guidelines..For example, say I forecast that 5000 will be produced...but actually 6000 is actually produced...So, it lead to over-absorb due to budget<actual

I had done question similar with this...but i also face problem same with you...but i think and try to understand...so far i only think this way in order for me to understand...

Hope i do not say wrong Smile

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Jocelyn Ting



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PostSubject: Re: Marginal costing and absorption costing   Mon Jun 09, 2008 9:35 am

i know but da budgeted fixed OH is less den da actual fixed OH..
dat means more money spent as actual OH..
so it should be under absorbed coz da budgeted OH is lesser..
sorry,cz i still cnt understand wat u trying 2 say..
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jeretang288
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PostSubject: Re: Marginal costing and absorption costing   Tue Jun 10, 2008 12:34 am

Ok...Jocelyn. You must changed your point of view...that when budgeted fixed OH is less than actual........Like I said that I budgeted that it will be 5000...but it come out 6000...so it will be overabsorb because there is extra 1000 already...so that is not underabsorb...but vice versa..when i set the budgeted is 5000 but it come out 4000 (actual one) so i underabsorb the fixed overhead so it will be underabsorb

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keh bin
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PostSubject: Re: Marginal costing and absorption costing   Tue Jun 10, 2008 4:43 am

eh u talking bout page 143 hor?
i oso tink kinda weird la..
coz u see...
u compare wit page 134. its lik they're giving the same thing but different answer la..
weird. afro
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Jocelyn Ting



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PostSubject: Re: Marginal costing and absorption costing   Tue Jun 10, 2008 1:08 pm

what is da different between 'production OH absorbed', 'production OH incurred' adn 'actual production OH'?
this few terms always confuse me!!
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jeretang288
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PostSubject: Re: Marginal costing and absorption costing   Tue Jun 10, 2008 10:18 pm

i think incurred = absorbed...is it?? and actual production OH is the actual one not the budgeted one..

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Kelly piggy
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PostSubject: Re: Marginal costing and absorption costing   Wed Jun 11, 2008 1:15 am

i tot incurred = actual? hmm.. dunno la...
but absorbed mean production OH u estimated to use...
and for pg 143... i tink it like dat.. at 1st u do d budget..u estimate u ll use 12000 but end up u used 10000 only...
but when u do ur budget 12000 is absorbed edi... so d 2000 is overabsorbed (profit)
can understand ar? lol
n for pg 134 oso no prob de actually...i tink... XD
cuz if u use flexible budget u ll find 84000 ma rite? (as written dere)
but in real life u used 85000 wor... so u hav underabsorbed lor... dat 1000 ll be expense...
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PostSubject: Re: Marginal costing and absorption costing   Wed Jun 11, 2008 11:20 am

I think in the pg143...I think $12,000 is the flexed budget and 10,000 is the original budget...and it is overabsorbed....i found that in pg134, the 84,000 is the flexed budget and the 85,000 is the actual one and it is underabsorbed...

I think the whole thing is based on the flexed budget because [in pg143], the difference is 2,000 and flexed budget more than the original budget so it is overabsorb. [in pg134], the difference is 1,000 and the flexed budget is less than the actual one so it is under-absorb...

Tell me if i explain wrongly....

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kellytan88
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PostSubject: Re: Marginal costing and absorption costing   Wed Jun 11, 2008 2:57 pm

hey guys!!! chills....page 143 is not coming out, it is not in our syllabus!!! according to ms yu!!! just make sure you know how to calculate AC & MC!!! LOL XD
let the questions remain until we study T4!!
*under absorbed and over absorbed is nt in our syllabus!!

XOXO
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jeretang288
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PostSubject: Re: Marginal costing and absorption costing   Wed Jun 11, 2008 10:08 pm

oo...yeah meh...HAHA....not thought of that...thanks kelly

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Jocelyn Ting



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PostSubject: Re: Marginal costing and absorption costing   Thu Jun 12, 2008 12:15 am

OMG!!!!!!!!!!!
den y dey put dat in P2 paper???
i study dat topic dunno hw many times!!!!
damn it..waste my time studying on dat....
bt luckily it does nt come out..if nt i will b dying.... Smile
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Jocelyn Ting



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PostSubject: Re: Marginal costing and absorption costing   Thu Jun 12, 2008 12:17 am

thx Kelly for telling dat.. Laughing
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kellytan88
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PostSubject: Re: Marginal costing and absorption costing   Thu Jun 12, 2008 12:47 am

if got sure ms yu gt teach one mar...she also didnt teach us that..lol XD
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keh bin
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PostSubject: Re: Marginal costing and absorption costing   Thu Jun 12, 2008 9:36 am

ya la kelly..
ac mc pro.
hahaha...
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kellytan88
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PostSubject: Re: Marginal costing and absorption costing   Thu Jun 12, 2008 1:13 pm

uh uhm, im not pro lo, i am not qualified enough la!! u blind one!! haha
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