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

Accounting Nov 16, 2020

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

Expert Solution

Overheads were under-absorbed by £3,140

Absorbed = 2410*10.5 =25305

Under-absorbed = 25305 - 28445 = -3140

Archived Solution

Unlocked Solution

You have full access to this solution. To save a copy with all formatting and attachments, use the button below.

Already a member? Sign In

Important Note: This solution is from our archive and has been purchased by others. Submitting it as-is may trigger plagiarism detection. Use it for reference only.

For ready-to-submit work, please order a fresh solution below.

Or get 100% fresh solution

Get Custom Quote