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A company has been using an overhead absorption rate of £10

Accounting

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A company has been using an overhead absorption rate of £10.50 per machine hour in its Assembly department. During the year the overhead expenditure amounted to £28,445 and 2,410 machine hours were incurred.

Which of the following is correct?

• Overheads were over-absorbed by £3,140
• Overheads were under-absorbed by £3,140
• Overheads were under-absorbed by £31,400
• Overheads were over- absorbed by £31,400