Question

factory expenses actually paid rupees 10000 rate of recovery is 30% of direct labour. direct labour is rupees 25000 it shall be​

Answer 1

Answer:

unison

Explanation:

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Answer 2

There is an under absorption of overheads by ₹2,500.

In cost accounting, we prepare a cost sheet to ascertain the cost of the upcoming year but all these costs are based on the assumption of the previous year and trends. There are many times we cannot predict the exact cost of overhead. So, there are chances of over or under absorption of overheads. This difference can be eliminated by using a supplementary rate.

In this question, we expect the recovery rate of factory expenses is 30% of direct labor that is ₹7500 but actually we paid ₹10,000 as factory expense which is more than expected.