Yokojo Ltd specializes in the servicing of Japanese vehicles. The following is Yokojo’s budget for 2020:

Fixed manufacturing cost.....................................................¥598,500
Budgeted unit of production (3 hours per unit)......................9,500

The following activities took place during the year:

Required

Fixed overhead is absorbed on the basis of labor hours.
1. Calculate overhead absorption rate.
2. Calculate the absorbed overhead for the two months, indicating the extent of over or under absorption of overhead in the two months.
3. Explain the reasons for under- or over absorption of overheads.

Transcribed Image Text:

Actual fixed manufacturing cost (¥) Actual hours worked January 600,000 28,950 February 650,000 29,400