Over-Absorption and Under-Absorption of Overheads
In this article we will discuss about ‘Over-Absorption and Under-Absorption of Overheads’:- 1. Definition of Over-Absorption and Under-Absorption of Overheads 2. Treatment of Over-absorption or Under-absorption in Cost Accounts. Definition of Over-Absorption and Under-Absorption of Overheads: Usually overheads are absorbed on the basis of predetermined rates. Since predetermined overhead rates are based on budgeted overheads and budgeted production, invariably the [...]