05-26-2009, 03:58 PM
The absorption rate is 5 as you said. First we will abrobe 5*2500=12500 to job. absorbed fixed cost is lower then bughted that is why it is under applied foh case. as you know fixed cost does not change with the change in production. we will adjust the extra amount by variance analysis. 15000-12500=2500 will be charged to production.
