A-LevelAccountingTraditional costing methods9706/12 · Oct/Nov 2011 · Q291 Mark

What will cause under-absorption of fixed production overheads?

Aabsorption of overheads is based on actual expenditure and actual activity

Bactual expenditure on overheads is below budget expenditure

Cactual activity is above budgeted activity

Dactual activity is below budgeted activity and actual expenditure is as budgeted

✓ Correct answer

D: actual activity is below budgeted activity and actual expenditure is as budgeted

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Topic: Traditional costing methods, A-Level Accounting (syllabus 9706). Multiple choice, 1 mark.
Source: A-Level Accounting, Oct/Nov 2011 Paper 1 Variant 2, question 29.

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