Which ONE of the following statements is correct?

FL uses an absorption costing system. The overhead absorption rate for production overheads is $8.60 per direct labour hour.

Budgeted production overhead costs for the year were $473,000 and actual costs incurred were $468,000. 56,000 labour hours were used.

Which ONE of the following statements is correct?
A . Overheads were under-absorbed by $5,000
B . Overheads were over-absorbed by $8,600
C . Overheads were under-absorbed by $8,600
D . Overheads were over-absorbed by $13,600

View Answer

Answer: D