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SIR Could you please tell me what is under/over absorbed fixed overhead and why causes it and how do we calculate it?
Is it the correct way to calculate such as:
actual fixed overhead incurred
standard cost with actual production (actual quantity x standard cost per unit)
under/(over) absorbed overhead(actual fixed overhead incurred will be given in the question)
What you have written is correct and the actual will be given in the question.
It occurs because units produced at charged at the standard overhead absorption rate, but the actual total overheads might be difference.
I do explain this in my free lectures working through Chapter 9 of our lecture notes.
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