A factory has two production cost centres with the following labour and machine hours:What is the most appropriate basis for overhead absorption for the cost centres?
A. Machine hours for both cost centres
B. Machine hours for cost centre A and labour hours for cost centre B
C. Labour hours for cost centre A and machine hours for cost centre B
D. Labour hours for both cost centres
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Which is the correct term for the descriptions?Charging whole cost items to a cost centre or cost unit
Absorption
B. Allocation
C. Apportionment
Spreading costs over cost centres on a fair basis
Absorption
B. Allocation
C. Apportionment
The absorption rate has been calculated as $5.50 per unit, based on estimated production of 11,500 units. Actual production is 11,250 units and actual overheads are $63,250. What is the under or over absorption?
A. $1,375 under absorption
B. $1,375 over absorption
C. $550 under absorption
D. $550 over absorption
Which point on the graph shows the break-even point?