If over-absorbed overheads,does the amount over-absorbed have to be deducted from the cost of production? And therefore, if under-absorbed overheads, does the amount under-absorbed have to be added to the cost of production?
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Over/under absorbed overheads
over absorption
should be deducted from cost of sales or added to unadjusted profit
under absorption
should be added to cost of sales or deducted from unadjusted profit
10y ago#2mkalkwanza: Please do not answer in this forum - it is Ask the Tutor, and you are not the tutor (but please do help people in the general F5 forum) :-)
pulet: mkalikwanza is correct. However questions on over and under absorption don't get asked in Paper F5 - they are examined in Paper F2.
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