ADS CAF & CMA, i. The casts incurred during the latest quarter were as follows: Direct material 240,000 Direct labor 1,680,000 Indirect wages ~ machine maintenance 600,000 = stores 360,000 = quality contro! 468,000 ~ leaning and related services 400,000 Fuel and power 2,800,000 Depreciation on plant, machinery and building 1,560,000 Insurance on plantand machinery 240,000 Insurance on building 60,000 Stores, spares and supplies consumed 1,800,000 Rent, rates and taxes 1,200,000 ‘The production report for the previous quarter depicted the following information: fe ‘The rate of depreciation for plant and machinery is 10% per annum. a) Calculations that would be required to determine the factory overhead rate on various basis are as follows: a) Physical Output Bases: Factory Overhead Cast “Total Units Produced 9,488,000 7,000 (w—1) Factory Overhead Rate = Rs. 123221 per unit b) Direct Labor Cost Bases: Factory Overhead Cost ‘Total Direct Labour Cost * 9,488,000 *77680,000 (piven) Factory Overhead Rate =564.76% x 100 PDI ccicor crane accccnnnas orpaasian) Diet tabor tour mases: as000| roe 4) Machine Hour asex Facery Overhead Gost etal nach ama Factory Overhead Rate Re 13 912 per ache hour el upat ‘2060 7000050007000, Dre abe ors pert 200500400 Tastes (92000520) @uoon5)(4s000e8) 520000 20000 "steapoo “=1800%0 ‘alts (12006) Goo 0) 45000410) 00 1) Fagary overhead et acta each produc canbe determined fle ‘Alcaton asedo phys ts: Ps is 1200 20000 ‘500077600 Paar Oveteat ma una te tsedon Psa eapat Guatocttobe (noo atom Asano" guangoa patie iy taizayy aay sures? tad sans Atocation based nde sor ost Dieta est senses s%n000 ——tgmngo0 peat igi)“ fnabo) 37600) Saige Se Same Labertastorweal ——(1ngeot———zanoot sn000 rn ists) 21818) smal? = nage Fagay Oven Sour SATOH asatcnaltoite (5647 (searo* + a4en000 otics remain) —osnee0) =) SLATNUARSD = 24S14I560S = S54bSTSL6E TTT GF CHARTERED ACCOLNTANTSOF PAXESTAN [ECS ‘Allocation based on iret bor oor Dect ater Burs nom ronp00 team 20000 (wa) Fareed 18206 18206 18246 Gastaloctedttbe (210000 (Lo0gvex ——(tanonex 948800 potaae 26)=—TaG)e RDAs asvomesesagnuisaes — 320,307882 Aston based on machine hour: Maine Hrs now team S0000 ean000 et) Fay oeread new now now ostatoctedtothe (72000 ——(46n000x © ASOONNY SAN ots Hanje i292)- ake voouseseis 2225908734 626410557 Here, we can se that onc the predetermined rat calculated sing all the bases the fcary overhead costs thea lcatedto the products inthe proportion ofthe utilization of such bases on which the ate was calculated (nce the amounts dstrbued tothe profucsatryoverestcost per uateanbe calcuated ‘Wemutt alia note that factory overhead ost allocate to prodvsin cach ates dierent Tiss ofbareis very ri nd management mat determine with vigance the appropriate bebe 22 Factors aecting the predetermined overheat rate: