A factory has three production departments: The policy of the factory is to recover the production...

 

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A factory has three production departments: The policy of the factory is to recover the production overheads of the entire factory by adopting a single blanket rate based on the percentage of total factory overheads to total factory wages. The relevant data for a month are given below: Department Budget Machining Assembly Packing Actual Machining Assembly Packing Machining Assembly Packing Direct Materials ₹ (iii) (iv) 6,50,000 1,70,000 1,00,000 7,80,000 1,36,000 1,20,000 Direct Materials Direct Wages ₹ ₹ 1,200 600 300 80,000 3,50,000 70,000 96,000 2,70,000 90,000 Direct Wages Factory Overheads ₹ ₹ 240 360 60 3,60,000 1,40,000 1,25,000 3,90,000 84,000 1,35,000 The details of one of the representative jobs produced during the month are as under: Job No. 100 Department Director Labour Hour Director Labour Hour 60 120 40 20,000 1,00,000 50,000 24,000 90,000 60,000 Machine Hours Machine Hours 180 30 80,000 10,000 96,000 11,000 The factory adds 30% on the factory cost to cover administration and selling overheads and profit. Required: (1) (ii) Calculate the overhead absorption rate as per the current policy of the company and determine the selling price of the Job No. 100. Suggest any suitable alternative method(s) of absorption of the factory overheads and calculate the overhead recovery rates based on the method(s) so recommended by you. Determine the selling price of Job 100 based on the overhead application rates calculated in (ii) above. Calculate the department wise and total under or over recovery of overheads based on the company's current policy and the method(s) recommended by you. A factory has three production departments: The policy of the factory is to recover the production overheads of the entire factory by adopting a single blanket rate based on the percentage of total factory overheads to total factory wages. The relevant data for a month are given below: Department Budget Machining Assembly Packing Actual Machining Assembly Packing Machining Assembly Packing Direct Materials ₹ (iii) (iv) 6,50,000 1,70,000 1,00,000 7,80,000 1,36,000 1,20,000 Direct Materials Direct Wages ₹ ₹ 1,200 600 300 80,000 3,50,000 70,000 96,000 2,70,000 90,000 Direct Wages Factory Overheads ₹ ₹ 240 360 60 3,60,000 1,40,000 1,25,000 3,90,000 84,000 1,35,000 The details of one of the representative jobs produced during the month are as under: Job No. 100 Department Director Labour Hour Director Labour Hour 60 120 40 20,000 1,00,000 50,000 24,000 90,000 60,000 Machine Hours Machine Hours 180 30 80,000 10,000 96,000 11,000 The factory adds 30% on the factory cost to cover administration and selling overheads and profit. Required: (1) (ii) Calculate the overhead absorption rate as per the current policy of the company and determine the selling price of the Job No. 100. Suggest any suitable alternative method(s) of absorption of the factory overheads and calculate the overhead recovery rates based on the method(s) so recommended by you. Determine the selling price of Job 100 based on the overhead application rates calculated in (ii) above. Calculate the department wise and total under or over recovery of overheads based on the company's current policy and the method(s) recommended by you.

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