If a company uses predetermined overhead recovery rates and at the end of a period finds that there has been an under-recovery of overhead, which of the following best explains how the under-recovery has occurred?

(A) Actual overhead cost has exceeded the amount used as a basis for the establishment of the predetermined rate.
(B) Actual overhead cost has been less than the amount used as a basis for the establishment of the predetermined rate.
(C) Actual activity levels were higher than planned due to an increase in demand.
(D) An expected price increase in the overhead costs which was built into the overhead recovery rate did not take place.

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