Why repairs and maintenance and administration overheads are calculated by using recovery rate

Vanshita · 12 Mar 2025

Ok thanks,but my question is when to apply recovery rate concept and when not to apply

Pushan · 12 Mar 2025

recovery rate is a way of estimating how much of the overheads might be absorbed by the product, which helps in fixing the price of the product. Later, it may be found out that the overhead was overabsorbed or underabsorbed or it may also be the case that overhead absorbed and actual overhead expenses are equal