A company uses absorption costing with
a predetermined hourly overhead absorption rate.
The following situations arose last month:
(i) Actual hours worked exceeded planned hours.
(ii) Actual overhead expenditure exceeded planned expenditure.
Which of the following statements is correct?
A．Situation (i) would cause overheads to be
over absorbed and situation (ii) would cause overheads to be
under absorbed.
B．Situation (i) would cause overheads to be under
absorbed and situation (ii) would cause overheads to be over
absorbed.
C．Both situations would cause overheads to be over absorbed.
D．Both situations would cause overheads to be under absorbed.
答案：A
