2016 · Q82
Consider an industry with the following features:
- 1Budgeted monthly fixed cost = Rs. 2, 20,000
- 2Normal monthly output = 12000 per standard labour hour
- 3Standard variable overhead rate = Rs. 25 per labour hour What would be total factory overhead rate?
General Accounting Principles, Auditing and InsuranceCost and management accounting
- ARs. 40.33 per labour hour
- BRs. 41.67 per labour hour
- CRs. 42.67 per labour hour
- DRs. 43.33 per labour hour
Explanation
Fixed overhead rate = ₹2,20,000 ÷ 12,000 labour hours = ₹18.33 per hour. Adding the standard variable rate of ₹25 per hour gives a total factory overhead rate of ₹43.33 per labour hour. Hence (D).