A-LevelAccountingTraditional costing methods9706/12 · Oct/Nov 2021 · Q241 Mark

A business uses absorption costing and applies a mark-up of 50% when setting selling prices. Each unit of product X has a direct cost of $60 and a selling price of $150 and requires two hours of machine time. What is the overhead absorption rate per machine hour?

A$7.50

B$15.00

C$20.00

D$40.00

✓ Correct answer

C: $20.00

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Topic: Traditional costing methods, A-Level Accounting (syllabus 9706). Multiple choice, 1 mark.
Source: A-Level Accounting, Oct/Nov 2021 Paper 1 Variant 2, question 24.

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