Problem:
The following data relate to a manufacturing department for a period:
|
Budgeted Data Rs.
|
Actual Data Rs.
|
|
Direct material
|
1,00,000
|
1,40,000
|
|
Direct labour
|
2,00,000
|
2,50,000
|
|
Production overhead
|
2,00,000
|
2,30,000
|
|
Direct labour hours
|
50,000
|
62,500
|
|
Machine hours
|
40,000
|
50,000
|
Job ZX was one of the jobs worked on during the period. The actual data relating to this job were:
|
Direct material
|
Rs. 6,000
|
|
Direct labour
|
Rs. 3,000
|
|
Direct labour hours
|
750
|
|
Machine hours
|
750
|
Required:
1. Calculate the production-overhead absorption rate predetermined for the period based on:
1. Percentage direct-material cost.
2. Machine hours.
2. Calculate the production overhead cost to be charged to job ZX based on the rates calculated under (a) above.
3. Assuming that the machine hour rate of absorption is used, calculate the under- or over-absorption of production overheads for the period and state the appropriate treatment in the accounts.