A company uses absorption costing with a predetermined hourly overhead absorption rate. The following situations
have both occurred:
(i) Actual overhead expenditure exceeded planned expenditure; and
(ii) Actual hours worked were less than the planned hours.
Which of the following statements is correct?
A   Situation (i) would cause overheads to be over absorbed and situation (ii) would cause overheadsto be under
absorbed.
B   Situation (i) would cause overheads to be under absorbed and situation (ii) would cause overheads to be over
absorbed.
C   Both situations would cause overheads to be over absorbed.
D   Both situations would cause overheads to be under absorbed.

D

D