Magnetic Media Limited manufactures magnetic data disks which are used in the computer industry.

Since there is very little product differentiation between Magnetic’s products, it uses a process costing
system to determine inventory costs. Production and manufacturing cost data for 2017 are as follows:

Production Data: Units

Units in process, beginning of period (60% converted) 30,000
Units started 270,000
Completed and transferred to finished goods 250,000
Units in process, end of period (30% converted) 50,000

Manufacturing Costs: Rupees

Work-in-Process, beginning of period
(materials - Rs 46,800; conversion - Rs 25,200) 72,000

Current manufacturing costs:

Raw materials transferred to processing 613,200
Direct labor for the period 155,000
Actual factory overhead for the period:
Manufacturing supplies used 86,000
Indirect labor 21,000
Factory depreciation 140,000
Maintenance and repairs 35,800
Utilities 57,500
Other 15,000
355,300

A predetermined factory overhead rate based on the machine hours is used in costing inventory. Factory
overhead cost and machine hours were estimated at Rs 360,000 and 30,000 machine hours,
respectively. The factory operated 29,150 machine hours during 2017. All materials are added at the
start of the production process.

Required:

a. Calculate the predetermined factory overhead rate and the over- or underapplied factory
overhead balance at the end of 2017.

b. Prepare a cost of production report for Magnetic Media Limited for 2017 using the weighted
average approach to process costing.