Barbras company has a budgeted production overhead of N$50 000 and a budgeted activity of N$25 000 labour hours and therefore a recovery rate of N$2 per direct labour hour.

Required

Calculate the under or over-absorbed overhead, and the reason for under or over absorption, in the following circumstances: (25 marks)

a) Actual overheads are N$47 000 and 25 000 direct labour hours are worked.

b) Actual overhead are N$50 000 and 12 500 direct labour hours are worked. c) Actual overhead costs are N$47 000 and 21 500 direct labour hours are worked.