Sunday, December 14, 2014

What are over absorption and under absorption of overheads



Over absorption of overheads: - When applied factory overhead is greater than the actual factory overhead then it is called over absorption or over applied factory overhead. It is also called favorable overhead.

Under absorption of overheads:- When actual factory overhead is greater than the applied factory overhead then it is called under absorption or under applied factory overhead. It is also called unfavorable overhead.

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