MPX Resources uses absorption costing with a predetermined hourly fixed overhead absorption rate. For the yearended 31 December 2023, the following situations arose:1. Actual overheads were less than the budgeted expenditure; and2. Actual hours worked were less that the budgeted hours used to set the predetermine overhead absorption rate.Required:Which of the following statements is correct?OA. Both situations would cause the overheads to be over-absorbed.OB. Both situations would cause the overheads to be under-absorbed.OC. Situation 1 would cause the overheads to be under-absorbed and situation 2 would cause the overheads to be over-absorbed.OD. Situation 1 would cause the overheads to be over-absorbed and situation 2 would cause the overheads to be under-absorbed.

Situation 1this will cause the overhead to be over-absorbed this is because the actual overhead…

Answered: MPX Resources uses absorption costing…

Cornerstones of Cost Management (Cornerstones Series)

4th Edition

ISBN:9781305970663

Author:Don R. Hansen, Maryanne M. Mowen

Publisher:Don R. Hansen, Maryanne M. Mowen

Chapter4: Activity-based Costing

Section: Chapter Questions

Problem 11E: Ripley, Inc., costs products using a normal costing system. The following data are available for...

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