Sanit Ltd is an alcohol sanitizer manufacturing company that produced 175 000 units of 100 ml hand sanitizer bottles during the financial year ended 31 August 2023. The normal capacity is 100 000 units of hand sanitizer 100 ml bottles per year. The total cost per unit, excluding fixed production overheads, amounts to R50 per unit. The fixed production overheads incurred amounts to R700 000 for the year. The closing balance of finished goods is 5 000 units. Assume there is no opening balance. REQUIRED: The under / over recovered fixed production overheads that is recognized as an expense (cost of sales) according to IAS 2, Inventories, amounts to?
1. R700 000 over recovery
2. R525 000 under recovery
3. R525 000 over recovery
4. R0