All these math are from costing for overhead. Overhead absorption: 1) is the process whereby overhead costs
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All these math are from costing for overhead.
Overhead absorption:
1) is the process whereby overhead costs allocated and apportioned to production cost centres are added to unit, job or batch costs.
2) is sometimes called overhead recovery.
Overheads are usually added to cost units using a predetermined overhead absorption rate, which is calculated from budgets.
Overheads absorbed = predetermined OAR xActuallevel of activity
POAR = (Budgeted overheads/Budgeted level of activities)
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