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Dictionary definition: absorption rate
- Article from:
- A Dictionary of Accounting
- Author:
Copyright© A Dictionary of Accounting 1999, originally published by Oxford University Press 1999. (Hide copyright information)
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absorption rate (
overhead absorption rate
;
recovery rate
)
The rate or rates calculated in an
absorption costing
system in advance of an accounting period for the purpose of charging the
overheads
to the
production
of that period. Absorption rates are calculated for the accounting period in question using the following formula: budgeted overhead/budgeted production.
In absorption costing ...