ACCA · Question 14 · Cost Accounting Techniques
An aerospace manufacturer absorbs overheads based on direct labor hours.
Budgeted overheads: $500,000
Budgeted labor hours: 25,000 hours
Actual overheads incurred: $520,000
Actual labor hours worked: 27,000 hours
What is the under- or over-absorption of overheads for the period?
Answer options:
$20,000 under-absorbed
$20,000 over-absorbed
$40,000 over-absorbed
$40,000 under-absorbed
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