What this practice covers
These questions are drawn from past CIE 9706 Accounting papers and filtered to absorption costing. You answer, you find out immediately whether you were right, and you get the reasoning for the correct option and for each distractor. Wrong answers go to a mistakes locker so you can come back to exactly those.
Practice is free. You need an account only so your progress and your mistakes are still there next time.
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What examiners see students get wrong here
These are the errors that cost marks on absorption costing, taken from our own topic notes. Read them before you practise and you will recognise the traps in the questions.
- Using the words allocation and apportionment as though they meant the same thing.
- Recalculating the absorption rate using actual figures at the year end.
- Using budgeted activity instead of actual activity to calculate overhead absorbed.
- Getting the direction wrong: under-absorption reduces profit.
- Absorbing service department costs directly onto products without reapportioning first.
- Apportioning on a basis with no link to the cost, such as splitting rent by number of machines.
- Including selling and administration overheads in the absorption rate. Only production overheads are absorbed.
Revise it first
If any of the above is unfamiliar, work through the notes before practising: Absorption costing revision notes.