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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