- 1 Marks
Question
When the actual overhead is less than the absorbed, there is:
A. Equal absorption
B. Major absorption
C. Under absorption
D. No absorption
E. Over absorption
Answer
E. Over absorption
Explanation:
When the absorbed overhead (the overhead allocated to products or services) is greater than the actual overhead incurred, this is termed “over absorption.” It indicates that more overhead has been applied to production than was actually incurred, making option E the correct choice.
- Tags: Costing, Over Absorption, Overhead Absorption, Under Absorption
- Level: Level 1
- Topic: Costing Techniques
- Series: NOV 2023
- Uploader: Theophilus