Accounting 9706 · AS & A Level · Traditional costing methods

Traditional costing methods — practice question

A business allocates overheads on the basis of machine hours. In the previous month, it recorded the following figures: actual overheads $158\,200$, actual machine hours $7310$, budgeted overheads $168\,200$, budgeted machine hours $8410$. Which of the following statements is correct?

  • AOverheads were over-absorbed by $10\,000$.
  • BOverheads were over-absorbed by $12\,000$.
  • COverheads were under-absorbed by $10\,000$.
  • DOverheads were under-absorbed by $12\,000$.

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