Pre-determined factory overhead rate was ₹ 15 per labour hour. Actual labour hour worked 60,000. Actual factory overhead was ₹ 11,00,000 however it…
CA Intermediate · Cost and Management Accounting · MTP · September 2026
Pre-determined factory overhead rate was ₹ 15 per labour hour. Actual labour hour worked 60,000. Actual factory overhead was ₹ 11,00,000 however it includes ₹ 26,000 being the wages paid for strike period and overtime wages amounting to ₹ 9,000. It was observed that 2/3 of the under absorbed were due to inflation and rest were due to faulty planning. The amount of over/under absorbed factory overhead transferred to costing P&L will be:
Suggested Answer and Working Notes:
Correct Answer: Option (A)
(a) 58,000 under-absorbed
Topics: Employee Cost & Direct Expenses, Overheads - Absorption Costing Method
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