= eee heads » [ Chapter Si ~ ih A ~~ ~ ea Z Bee ca paar Saal Direct material _ Direct _Cabour —eaihag Ove heads 8g bh IF dteretaty == 2 oe a= : : lee 2 be ee a Unets — Precly teal 3,0 ke Se 8 Se ee ee ° Djvet Malai (2) __ Dyret_moftvol £0, op ° Dict _bur(uney IS Divert __(abour _4 Yar 3) ° Peep et Fok Bit a 308) 43 2 es eect A . . » de Det Maten’a) |r \s Diet labour F500 > Fol Lye? 20D d et fy yy vf orsne I SL~!.@. Cad cubgtions ok Stayt @ Cabatelon at =a 4 Year a ott = Dade, Le te 4t, Pri day — __ Port _la) sind ae i ‘i Coal ateh onic 2 = m att of year 7 Rote C cael) E ot Overhead noe i delampned cod et at aioe j 4e0.00 Use? OAR. = —Dee’s\'on male ing -&u ebay - te. 0 Contig = Pap duct eatin (Tet ah, ) One = “e+ Budgeted Ove heads é oh yAih Dale Wy) att Lob shen, pete - bectegs are o loW 3 i Repaiy — Majrtenao ms en Tnaivante, Gs Ge Fu €& pow Gee Fabry Coy t— Ri Boe - ~ Deena R: Asner ™ Oey Ove heads (2s Lear = Geel) Ps: Bulg eae Divetite roategal ofthe Re Smo | 7? Budget Dicect there est 23 7Steve = erie Aste aie, atu) me Required - = 1, OAR eee ee a =~ Lor om Arect prafedal _coit's SeJosg =i = cl, Direct Labor hours = aaa _~ \ aoe tte) a ES i, Direct nokeial tat = at a) Peis igt oe o> we Bees 2 DGB GAM IT EL wae 9 Fe PARC BOE \Yio.g poe 2a _linited Ch _ruhore!) Orr “fekal___ Badge! Ott — ail ee >: fn ies) ha| =vattely ee ies / visions 2 U9 € 2001 4 AB tala te reainent of under-absorbed and over-absorbed factory overheads. Give thee resons for under-absorbed / over absorbed factory overheads. (by On December 1, 20X3 Zia Textile Mills Limited purchased a new cutting machine for Ks. 1,300,000 to augment the capacity of five existing machines in the Cutting Department. The new machine has an estimated life of 10 years after which its scrap value is estimated at Rs, 100,000. Itis the policy of the company to charge depreciation on straight line basis. of ) The new machine will be gyailable to Cutting Department with effect from Febguary 1, 20X4, It is budgeted that the machine will work for 2,600 hours in 20X4, ‘The budgeted hours include: Ne | J © 80.hours for setting up the machine; and Prdwki™h © La hours for maintenance. The related expenses, for the year 20X4 have been estimated as under (4) Electricity used by the machine during the production will be 10 units_per hour @Rs.8.50 per unit (B Cost of maintenance will be Rs. 25,000. al @) The machine requires replacement-of a part at the end of every month which Rs, 10,000 on eae ceplaccimeny &) A iliachine operator wil be empio (9) It is estimated that on installation of the mi $.000 per month, (6 Cutting Department uses a single rate for the recovery of running costs of the machines. It has been budgeted that other five machines will work Tor 12,300 hours during ihe year 20X4, including 900 1g Department is charging Rs. 390 per productive hour cost at Rs. 9,000 per month ine, other departmental overheads will inerease by Rs. hours for maintenance. Presently, the Cu Tor recovery of running cost of the existing machines isequire ynpute the revised machine hour rate which the Cutting Departtes: should use during the year feyised machine hour rate 8 204. r u [poeDay: @n@mns) joel Z aigetd_[ Deptt Ee a Fasten Depetinct (00 oD ) | T Mojntenance} [C ontew toe ont ot Deptt [ Dee aay? ge oesry IO OE 45 ) eee gut fey Depoy-tmerct ee hae pceing it Siting oy Finiching = EG iat :