Accounting · Management Accounting
A cost centre has an overhead absorption rate of $4.25 per machine hour, based on a budgeted activity level of 12,400 machine hours. In the period covered by the budget, actual machine hours worked were 2% more than the budgeted hours and the actual overhead expenditure incurred in the cost centre was $56,389. What was the total over or under absorption of overheads in the cost centre for the period?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1$3,689 under absorbed
- 2$3,689 over absorbed
- 3$2,635 under absorbed✓
- 4$1,054 over absorbed
Correct answer
$2,635 under absorbed
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