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SP Limited operates an absorption costing system.

SP Limited operates an absorption costing system. It uses a predetermined overhead absorption rate based on machine hours. Budgeted factory overheads for the year were £1,080,000 but actual overhead incurred was £1,046,000. Budgeted machine hours were 120,000 and actual machine hours were 119,000.

Overheads for the period were.

A.

Under-absorbed by £25,000

B.

Under-absorbed by £9,000

C.

Over-absorbed by £25,000

D.

Over-absorbed by £9,000

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