A personal products company, Elixir, produces a range of soaps. The budget manufacturing overhead costs for the soap factory was £562,500 for the current year. A blanket rate was  calculated on the basis off orecast sales of 450,000 bars of soap.

REQUIRED:

Calculate the under or over recovery for the following possible outcomes at the yearend. Explain what accounting adjustments would need to be made to the accounts in all cases:

a) Actual overheads of £583,750 and sales of 460,000 bars of soap.

b) Actual overheads of £525,450 and sales of 430,000 bars of soap.

c) Actual overheads of £533,550 and sales of 460,000 bars of soap.

d) Actual overheads of £595,250 and sales of 445,000 bars of soap.