Accounting · Overhead Absorption
What is the purpose of an overhead absorption rate (OAR)?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1To collect indirect costs into a single cost centre.
- 2To allocate and apportion common costs to benefiting cost centres.
- 3To charge a fair share of overheads to a product or service.✓
- 4To reconcile budgeted and actual overhead costs.
Correct answer
To charge a fair share of overheads to a product or service.
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