Assertion (A): Overhead absorption is sometimes called overhead recovery.
Reason (R): Overheads are usually added to cost units using a predetermined overhead absorption rate, which is calculated using figures from the budget.
1
Both A and R are true, and R is the correct explanation of A.
2
Both A and R are true, but R is not the correct explanation of A.
3
A is true but R is false.
4
A is false but R is true.