MPX Resources uses absorption costing with a predetermined hourly fixed overhead absorption rate. For the year ended 31 December 2023, the following situations arose: 1. Actual overheads were less than the budgeted expenditure; and 2. Actual hours worked were less that the budgeted hours used to set the predetermine overhead absorption rate. Required: Which of the following statements is correct? OA. Both situations would cause the overheads to be over-absorbed. OB. Both situations would cause the overheads to be under-absorbed. OC. Situation 1 would cause the overheads to be under-absorbed and situation 2 would cause the overheads to be over- absorbed. OD. Situation 1 would cause the overheads to be over-absorbed and situation 2 would cause the overheads to be under- absorbed.
MPX Resources uses absorption costing with a predetermined hourly fixed overhead absorption rate. For the year ended 31 December 2023, the following situations arose: 1. Actual overheads were less than the budgeted expenditure; and 2. Actual hours worked were less that the budgeted hours used to set the predetermine overhead absorption rate. Required: Which of the following statements is correct? OA. Both situations would cause the overheads to be over-absorbed. OB. Both situations would cause the overheads to be under-absorbed. OC. Situation 1 would cause the overheads to be under-absorbed and situation 2 would cause the overheads to be over- absorbed. OD. Situation 1 would cause the overheads to be over-absorbed and situation 2 would cause the overheads to be under- absorbed.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps
Recommended textbooks for you
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education