Page 58 - F2 Slides 2017-18
P. 58

Under and over absorption








             Overhead


             Absorbed                                                                                     Under- or
                                                               Actual
          • OAR × Actual                                    overhead                                           over-

             activity                                                                                      absorbed
                                                             incurred
                                                                                                           overhead














         If Absorbed overhead > Actual overhead = over-absorbed

         If Absorbed overhead < Actual overhead = under-absorbed












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