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Subjects · Leaving Cert Accounting

Leaving Cert Accounting: Overhead absorption

How often Overhead absorption comes up on the Accounting papers, every year it was asked, and questions to try.

HL Asked on 6 of the last 10 Higher Level papers, most recently in 2026. most years

OL Asked on 5 of the last 10 Ordinary Level papers, most recently in 2025.

Overhead absorption, Higher Level(6 marks)

Quick ones on Overhead absorption.

(a)Allocation of an overhead means…
  1. Sharing the cost between cost centres
  2. Charging the whole cost to one cost centre
  3. Writing the cost off
(b)Apportionment of an overhead means…
  1. Ignoring it when costing products
  2. Charging it all to one cost centre only
  3. Sharing it between cost centres on a fair basis
(c)The overhead absorption rate is…
  1. Budgeted overheads ÷ budgeted activity
  2. Budgeted overheads ÷ actual activity
  3. Actual overheads ÷ actual activity
Show the answers

(a) Charging the whole cost to one cost centre

(b) Sharing it between cost centres on a fair basis

(c) Budgeted overheads ÷ budgeted activity

Your turn: Higher Level questions on Overhead absorption.

Higher Level

Asked on 6 of the last 10 Higher Level papers, most recently in 2026. most years

Every paper, year by year

YearWhere it came up
2026Q8
2025Not asked
2024Not asked
2023Not asked
2022Q8
2021Q8
2019Q8
2018Q8
2017Not asked
2016Q8

Links open the State Examinations Commission’s paper for that year.

More Overhead absorption questions

Overhead absorption, 2 marks

Rate €10 per hour; actual hours 5,000; actual overheads €48,000. Result?

  1. Under-absorbed by €2,000
  2. Over-absorbed by €48,000
  3. Over-absorbed by €2,000
Show the answer

Over-absorbed by €2,000

Absorbed = €10 × 5,000 = €50,000. Actual is €48,000, so €2,000 is over-absorbed and credited to the P&L.

Overhead absorption, 2 marks

Over-absorbed overhead is…

  1. Carried forward in stock
  2. Added back to profit
  3. Deducted from profit
Show the answer

Added back to profit

Too much overhead was charged to products, so the excess is written back as a credit, increasing profit.

Overhead absorption, 2 marks

Why are absorption rates based on budgeted figures?

  1. So jobs can be costed as they are done, before actual totals are known
  2. Because budgeted figures always turn out to be exactly right in the end
  3. Because tax law requires budgeted rates to be used
Show the answer

So jobs can be costed as they are done, before actual totals are known

Actual overheads and hours are only known at year end, so budgeted figures let prices and job costs be set during the year.

Ordinary Level

Asked on 5 of the last 10 Ordinary Level papers, most recently in 2025.

Every paper, year by year

YearWhere it came up
2026Not asked
2025Q8
2024Not asked
2023Q8
2022Not asked
2021Q8
2019Q8
2018Not asked
2017Q8
2016Not asked

Links open the State Examinations Commission’s paper for that year.

More Overhead absorption questions

Overhead absorption, 2 marks

A department where most work is done by machines should absorb overheads using a…

  1. Direct labour hour rate
  2. Floor area rate
  3. Machine hour rate
Show the answer

Machine hour rate

Match the rate to what drives the work: machine hours for machine-intensive departments, labour hours for labour-intensive ones.

Overhead absorption, 3 marks

Overheads €60,000; 12,000 machine hours. Overhead absorption rate?

  1. €50 per machine hour
  2. €5 per machine hour
  3. €0.20 per machine hour
Show the answer

€5 per machine hour

Absorption rate = overheads ÷ machine hours = €60,000 ÷ 12,000 = €5 per machine hour.

Overhead absorption, 2 marks

Absorption costing means…

  1. Each product takes a share of the overheads
  2. Only variable costs are charged to products
  3. Overheads are left out of product costs
Show the answer

Each product takes a share of the overheads

Overheads are absorbed into each job or unit using a rate, so the full cost can be found and a price set.

Other Accounting topics

All of Leaving Cert Accounting