Absorbed overhead (also known as applied overhead or recovered overhead) refers to the amount of overhead costs allocated to a specific production process or cost unit within an organization during an accounting period, using the technique of absorption costing.
In absorption costing, overabsorbed overhead occurs when the absorbed overhead is greater than the incurred overhead costs for a period, representing an addition to the budgeted profits of the organization.
An accounting term related to overhead costs that have been recovered or anticipated to be recovered through cost allocation.
In a system of standard costing, the total difference arising between the standard variable overhead absorbed for the actual units produced and the actual variable overhead expenditure incurred. See also Overhead Total Variance.
