Can anyone answer the situation (ii)?
A company uses absorption costing with a predetermined hourly overhead absorption rate. The following situation have both occurred:
(i) Actual overhead expenditure exceeded planned expenditure: and
(ii) Actual hours worked were less than the planned hours
Which of the following statement is correct?
a) situation (i) would cause overhead to be over absorbed and situation (ii) would cause overhead to be under absorbed.
b) situation (i) would cause overhead to be under absorbed and situation (ii) would cause overhead to be over absorbed.
c) both situation would cause overhead to be over absorbed
d) both situation would cause overhead to be under absorbed
The correct answers is (D)
i understand the situation (i) but i don't know situation (ii).
A company uses absorption costing with a predetermined hourly overhead absorption rate. The following situation have both occurred:
(i) Actual overhead expenditure exceeded planned expenditure: and
(ii) Actual hours worked were less than the planned hours
Which of the following statement is correct?
a) situation (i) would cause overhead to be over absorbed and situation (ii) would cause overhead to be under absorbed.
b) situation (i) would cause overhead to be under absorbed and situation (ii) would cause overhead to be over absorbed.
c) both situation would cause overhead to be over absorbed
d) both situation would cause overhead to be under absorbed
The correct answers is (D)
i understand the situation (i) but i don't know situation (ii).
