PRC-1 · Chapter 7 · Question 87 of 100
Which of the following correctly defines 'under-absorbed' overheads in a manufacturing environment?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) Actual overheads > Absorbed overheads
Explanation
Under-absorption means that the total overheads absorbed into inventory costs (using predetermined rates based on normal capacity) were less than the actual overhead costs incurred during the period.
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