Accounting · Overhead Absorption
A company uses a predetermined overhead absorption rate of $3.50 per machine hour, based on 32,000 budgeted machine hours. During the period, actual overheads incurred were $108,875 and actual machine hours worked were 30,000. By how much was the overhead under- or over-absorbed?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Under-absorbed by $3,875✓
- 2Under-absorbed by $7,000
- 3Over-absorbed by $3,875
- 4Over-absorbed by $7,000
Correct answer
Under-absorbed by $3,875
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