Absorption Costing: Over and Under-absorption
Cambrige AS and A Level Accounting Notes (9706)/ ZIMSEC Advanced Accounting Level Notes: Over and Under-absorption
- As has been said before overhead absorption rates are calculated in advance
- The formula for getting an overhead absorption rate is:
- \text{OAR=}\dfrac{\text{Budgeted Production Overhead}}{\text{Budgeted Level of Activity}}
- The budgeted level of activity can be units,labour hours, machine hours etc
- It is […]