Question

Over absorption of overheads in costing
O No profit no loss
O Increases financial profit
O Decreases financial profit
O Decreases costing profit​

Answer 1

Answer:

b) increases financial profit

Explanation:

If overhead is over absorbed, this means that fewer actual overhead costs were incurred than expected, so that more cost is applied to cost objects than were actually incurred. This means that the recognition of expense is reduced in the current period, which increases profits.