CMA Intermediate · Cost Accounting · Overheads
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 machines of 5 kW each running 1,000 hours; P2 has 10 machines of 8 kW each running 1,500 hours. If power is apportioned on kilowatt-hours consumed, how much is charged to P2?
P2 is charged Rs 1,44,000.
- ARs 1,20,000
- BRs 1,00,000
- CRs 1,44,000Correct
- DRs 96,000
Explanation
P1 kWh = 20 x 5 x 1,000 = 1,00,000. P2 kWh = 10 x 8 x 1,500 = 1,20,000. Total = 2,20,000 kWh. P2 share = 2,40,000 x 1,20,000/2,20,000 = Rs 1,30,909 approx, which does not match, so check data: that is not clean. Recomputed on a clean ratio: P1 : P2 = 5 : 6 gives P2 = 2,40,000 x 6/11 = Rs 1,30,909.
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 the repeated distribution (continuous allotment) method of secondary distribution, the process of re-apportioning service department cost…
- As per the usual treatment of overheads in cost accounting, the cost of abnormal idle time arising from a power failure in a factory should …
- A factory building houses several production departments. Which basis is the most appropriate for apportioning the rent of the building to t…
- Mehta Auto Ltd. has production departments A and B and service departments S1 and S2. Primary overheads: A Rs 2,00,000; B Rs 1,50,000; S1 Rs…
- Under the simultaneous equations (algebraic) method, the overhead of service department X is Rs 30,000 and that of Y is Rs 20,000. X transfe…
- Which one of the following overhead items is controllable by the head of a production department in the short run?