A company uses a predetermined overhead rate of R3.50 per machine hour based on 30,000 budgetedmachine hours for the period. At the end of the period, production was discovered to have used a total of 25,000 actual machine hours, at an actual overhead rate of N$3.00 per machine hour.

By how much were the total overheads for the period over absorbed?

2.The opening inventory of finished goods of Green Ltd consists of 1,000 units valued at N$100 each. During the current year, Green manufactured 8,000 units at a cost of N$120 per unit. The closing inventory of finished goods at the end of the year was 800 units. Green Ltd uses the FIFO method to value inventory.

Calculate the value of closing inventory of finished goods

3.HER Cosmetics Ltd is a company that manufactures face products. The system involves 2 processes A and B. The output of process A is passed down to Process B. More units are input into process B. Under normal circumstances, management expects to lose 10% of input in Process B, that is sold to a local vendor for N$20.00. The details of Process B are shown below:

Process B

Cost details

From process A

450kg valued at N$6,500

Direct Material

220kg at N$15 per kg

Direct Labour

N$56,000

Overhead cost

N$9,660

At the end of the period actual finished goods that were output from process B were determined to be 600 kg. Calculate the value of Finished goods.

Answer rating: 100% (QA)

1 To calculate the overabsorbed overheads we need to find the difference between the overhead applied using the predetermined rate and the actual over... View the full answer