2. CASIO is a fully automated electronics manufacturing company. Company is incurring a lot of overheads in its manufacturing department. Cost accountant of the company wants to use machine hour rate method for the absorption of manufacturing overheads and seeks your help. You are required to prepare a report detailing the method, its suitability, steps in its computation and the advantages and disadvantages of using it.
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THE OVERHEAD AND G&A CCDR CATEGORIES
In gen- eral, overhead costs are between 150–250 percent of the cost of a direct labor hour. Factory overhead covers such expenses as electric- ity, cleaning, heat, plant depreciation, and factory support labor (depending on the company).
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