There were 100,000 budgeted machine hours for the forthcoming period. The fixed production overhead absorption rate was $2.50 per machine hour. During the period, the following actual results were recorded: Standard machine hours 110,000 Fixed production overheads $300,000 What was the fixed production overhead under/over absorption amount? A Over absorbed by $25,000 B Under absorbed by $50,000 C Over absorbed by $50,000 D Under absorbed by $25,000
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
A company absorbs fixed production
There were 100,000 budgeted machine hours for the forthcoming period. The fixed production overhead
absorption rate was $2.50 per machine hour.
During the period, the following actual results were recorded:
Standard machine hours 110,000
Fixed production overheads $300,000
What was the fixed production overhead under/over absorption amount?
A Over absorbed by $25,000
B Under absorbed by $50,000
C Over absorbed by $50,000
D Under absorbed by $25,000
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