Accounting 9706 · AS & A Level · Traditional costing methods

Traditional costing methods — practice question

A business applies fixed overheads on the basis of direct labour hours. The information below is given: - Overheads: actual $525000, budgeted $525000 - Direct labour hours: actual 16300, budgeted 15000 - Indirect labour hours: actual 2700, budgeted 2500 Which statement is correct?

  • AOverheads were over absorbed by $45000.
  • BOverheads were under absorbed by $45000.
  • COverheads were over absorbed by $45500.
  • DOverheads were under absorbed by $45500.

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