CA Inter P4 · Chapter 4 · Question 11 of 11
Department P absorbs overheads on machine hours: budgeted overheads ₹4,50,000, budgeted machine hours 15,000. Department Q absorbs on labour hours: budgeted overheads ₹2,40,000, budgeted labour hours 20,000. A job requires 18 machine hours in P and 25 labour hours in Q. Total overheads absorbed by the job are:
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: A) ₹840.00
Explanation
Rate for P = ₹4,50,000 / 15,000 = ₹30 per machine hour. Rate for Q = ₹2,40,000 / 20,000 = ₹12 per labour hour. Job overheads = (18 x ₹30) + (25 x ₹12) = ₹540 + ₹300 = ₹840. A blanket rate of ₹19.71 on all 43 hours would give ₹847.71.
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