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…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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The total fixed costs charged against the current year’s operations assuming that NUBD uses absorption costing is
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1. The total variable costs charged to expense for the year, assuming that NUBD uses variable costing would be? 2. The total fixed costs charged against the current year’s operations assuming that NUBD uses absorption costing is?
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Question: The total fixed costs charged against the current year’s operations assuming that NUBD uses absorption costing is

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