Accounting · Overhead Absorption
In a factory with a single overhead absorption rate based on machine hours, which of the following scenarios would lead to overheads being over-absorbed?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1Actual machine hours are less than budgeted machine hours, and actual expenditure is more than budgeted expenditure.
- 2Actual machine hours are more than budgeted machine hours, and actual expenditure is less than budgeted expenditure.✓
- 3Actual fixed overhead expenditure is more than budgeted expenditure.
- 4Actual machine hours are less than budgeted machine hours.
Correct answer
Actual machine hours are more than budgeted machine hours, and actual expenditure is less than budgeted expenditure.
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