CA Intermediate · Cost and Management Accounting · Job Costing
A job shop absorbs factory overhead on a machine hour basis. Budgeted overheads for the year are Rs 6,00,000 and budgeted machine hours are 20,000. Job M-9 used 150 machine hours. What overhead is charged to Job M-9?
Rs 4,500 is charged. The predetermined machine hour rate is budgeted overhead of Rs 6,00,000 divided by 20,000 budgeted hours, which is Rs 30 per hour, and multiplying by the 150 hours used by the job gives Rs 4,500.
- ARs 3,000
- BRs 4,500Correct
- CRs 45,000
- DRs 30,000
Explanation
Rate = 6,00,000 / 20,000 = Rs 30 per machine hour. Overhead for Job M-9 = 150 x 30 = Rs 4,500. Rs 3,000 would result from using 100 hours, and Rs 45,000 comes from a decimal slip.
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