PRC-1 · Chapter 7 · Question 67 of 100
Which of the following situations describes 'over-absorbed' overheads?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: B) Absorbed overheads > Actual overheads
Explanation
Over-absorption occurs when the overheads applied to inventory units (based on a predetermined rate) turn out to be greater than the overheads actually incurred during the period.
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