Question

Question 9:- Tanu Ltd. uses predetermined overhead rate of Rs. 15 per labour hour, the actual
overhead cost is Rs. 85,000 and actual labor hour are 5,750. The under or over absorption of
overhead is:
a) Rs 1,250 (over)
b) Rs 1,250 (under)
c) Rs 1,000 (over)
d) Rs 1,000 (under)​

Answer 1

Explanation:

Actual rate per hour = overhead cost is Rs. 85,000/actual labor hour are 5,750

Actual rate per hour= 14.78 per hour

under absorption of overhead = (15-14.78)*5750

under absorption of overhead =1265