Page 88 - DMGT202_COST_AND_MANAGEMENT_ACCOUNTING

Unit 5: Overheads

(c) Wages of caretakers, sweepers, etc. ` 3,500. Notes

(d) Other factory overhead charges ` 26,500.
A work order is executed in a shop occupying 3,000 sq.ft. and costs ` 5,000 in wages. If the
total wages for all the work orders executed in this shop amount to ` 80,000. Calculate the
total amount of factory overhead charges to be debited to the account of the work order in
question.
9. What is the process of ascertaining machine hour rate? What factors do you keep in view
while ascertaining the rate?
10. Discuss the various methods of absorption of factory overheads. Under what conditions, it
is said to be over-absorption of factory overheads?

Answers : Self Assessment

1. Overheads 2. Factory Cost
3. indirect material 4. Fixed expenses
5. output (or sales) 6. Semi-variable
7. fixed overhead rate 8. under absorption

9. direct labour hours 10. Machine hour rate

11. units produced 12. False
13. True 14. True
15. True

5.7 Further Readings

Books Richard G. Schroeder, Myrtle W. Clark, Myrtle W. Clark, Jack M. Cathey, Financial
Accounting Theory and Analysis: Text Readings and Cases, John Wiley & Sons Inc
Arora M. N., Cost and Management Accounting, Himalaya Publishing House, 2010
Pandey, IM, Management Accounting, Excel Book, New Delhi, 2007
Shah Paresh, Management Accounting, Oxford University Press, New Delhi, 2009

Online links www.futureaccountant.com
www.managementstudyguide.com

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