CA Inter P4 · Chapter 4 · Question 7 of 11
Budgeted factory overheads are ₹6,30,000 and budgeted prime cost is ₹21,00,000. Overheads are absorbed as a percentage of prime cost. A job has a prime cost of ₹48,000. The overheads to be absorbed by the job are:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: D) ₹14,400.00
Explanation
Absorption rate = ₹6,30,000 / ₹21,00,000 x 100 = 30% of prime cost. Overheads for the job = 30% x ₹48,000 = ₹14,400.
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