Model: Unabsorbed overheads
Using the following date relating to ABC Ltd, you are required to treat the under-noted unabsorbed overhead in the cost accounts.
|
Actual factory overhead |
= |
Rs.1,50,000 |
|
Actual man-days |
= |
Rs. 5,000 |
|
Actual production (units) |
= |
2,500 |
|
Sales during the period (units) |
= |
1,500 |
|
Semi-finished product ( 50% complete) units |
= |
500 |
Factory overhead is absorbed at the rate of Rs. 20 per man-day. It is found that 50% of the unabsorbed overhead is due to the increase in the overhead and the rest is due to a wrong estimation of output at the time of determination of the overhead absorption rate.
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