Under absorption of overhead expenses in cost accounting results in ........

Costing - Phase (I & II) Basics of Cost Control and Analysis

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Under absorption of overhead expenses in cost accounting results in _________.

decrease in costing profit

decrease in financial accounts profit

increase in costing profit

increase in financial accounts profit

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Explanation:

Under absorption of overhead expenses in cost accounting results in increase in costing profit. If overhead is under absorbed, this means that more actual overhead costs were incurred than expected, with the difference being charged to expense as incurred. This usually means that the recognition of expense is accelerated into the current period, so that the amount of profit recognized declines.