Fixed overhead under-absorption due to low activity or high actual costs Steps:

• Absorbed fixed overhead = predetermined rate × actual production volume.
• Under-absorption occurs if actual fixed overheads exceed absorbed amount.
• Key causes: actual volume below budgeted (less absorption) or actual overheads above budgeted (higher cost).
• Match choices to causes: 1 and 3 align with low volume and high actual overheads.

Why A is correct:

• Option A pairs factors 1 (low actual volume) and 3 (high actual overheads), both increasing under-absorption per absorption costing formula.

Why the others are wrong:

• B includes 4 (likely high volume, causing over-absorption).
• C includes 2 (likely low overheads, reducing under-absorption).
• D pairs 2 and 4 (both favor over-absorption).

Not enough information on exact factor definitions, but based on standard accounting principles.

Final answer: A