CMA Intermediate · Cost Accounting · Overheads
Factory rent of ₹80,000 is apportioned on floor area and machinery depreciation of ₹1,20,000 on the book value of machinery. Data: Dept A has 1,800 sq. ft. and machinery of ₹6,00,000; Dept B has 1,400 sq. ft. and machinery of ₹4,00,000; the Maintenance Dept has 800 sq. ft. and machinery of ₹2,00,000. What is the total of these two overheads apportioned to Dept A?
Dept A receives ₹36,000 of rent (1,800 out of 4,000 sq. ft.) and ₹60,000 of depreciation (₹6 lakh out of ₹12 lakh machinery value), so the total is ₹96,000. Each item must follow its own appropriate basis.
- A₹96,000Correct
- B₹90,000
- C₹1,00,000
- D₹1,20,000
Explanation
Rent for A = 80,000 × 1,800/4,000 = ₹36,000. Depreciation for A = 1,20,000 × 6/12 = ₹60,000. Total = ₹96,000. Apportioning both items on floor area gives 36,000 + 54,000 = ₹90,000, which is wrong because depreciation follows machinery value.
Did you get it right without looking?
One question tells you little. A timed set on Overheads shows your real accuracy, how long you take and where you lose marks.
More Overheads questions
- In a factory, the rent of the production building is Rs 1,20,000 per year and does not change with the level of output within the normal ran…
- Service departments S1 and S2 have primary costs of Rs 60,000 and Rs 40,000. S1 serves S2 and production departments P1 and P2 in the ratio …
- Sharma Engineering Ltd. incurred factory rent of Rs 1,80,000 for a building shared by three departments. Floor areas are: Cutting 2,000 sq. …
- Kaveri Textiles has two production departments, P1 and P2, and uses the following data for apportioning power cost of Rs 2,40,000: P1 has 20…
- Which of the following is correctly classified as an administrative overhead rather than a factory overhead?
- Which one of the following overhead items is controllable by the head of a production department in the short run?