25.A company uses absorption costing with a predetermined hourly fixed overhead rate.The following situations arose last year.
Would each of these situations cause overheads to be under absorbed or over absorbed?
答案：
Absorption rates are calculated by dividing the budgeted overhead by the budgeted level of activity. These rates are then applied to actual activity levels to calculate how much overhead is absorbed.Where the actual overhead is less than budget then the overhead will be over absorbed because the absorption rate is based on a higher value of overhead.
Where actual activity levels are less than budget then the overhead will be under absorbed as not enough activity has occured at the budgeted rate to cover the overhead.
