In case the amount of under or over absorbed overheads is significant, this rate is calculated to adjust the amount in the cost.

Related MCQs

• A company estimates its direct material requirements for the month of November 2014 to be Rs. 2,40,000 and the direct labour to be Rs. 1,500,00. It is the policy of the company to absorb overheads as under : Factory overheads 60% of direct wages Administrative overheads 20% of work cost Selling and distribution overheads 25% of work cost it is estimated that the selling and distribution overheads will increase by 15% in November the budgeted sales for the month of November 2014 is
• …………….is the excess of overheads absorbed over the actual amount of overheads incurred.
• The excess of overheads absorbed over the actual amount of overheads incurred is called: -
• ……………..is the amount by which the absorbed overheads fall short of the actual amount of overheads incurred.
• When the amount of overheads absorbed is less than the amount of overheads actually incurred.
• ABC Ltd. has furnished the following information for 4,000 units of product for the year 2014-2015 : Particulars Rs. Direct materials 2,50,000 Direct labour 2,00,000 Manufacturing overheads 2,80,000 (40 % fixed) Selling and administrative overheads 2,70,000 (30 % fixed) The total cost of 4,380 unit is
• When …………………….is used on the basis of budgeted overheads and the rate is applied to the actual base, the actual overhead expenses may be different from the charged overheads.
• At the end of a financial period, accounting entries for under absorbed overheads would be
• When the under or over absorbed amount is quite negligible, it is transferred to
• The process of distribution of overheads allotted to a particular department or cost center over the units produced is called: