The budgeted activity and cost data for each half year of XY Ltd were as follows:

The existing method of absorbing overhead is by a direct-wage percentage rate. A proposal has been made to change the overhead absorption to a direct labour-hour rate analysed into fi xed and variable overhead.
You are required to calculate under the new proposal (i.e., using direct labour-hour rates of absorption) for the fi rst six months period:

(a) The budget of direct labour-hour rates of overhead absorption for fi xed and variable overheads.

(b) The absorbed overhead.

(c) The over- or under-absorbed overhead.

Transcribed Image Text:

Direct labour hours Direct wages Overhead: Fixed variable During the first six months, the following actual results were achieved: Direct labour hours incurred Direct wages Overhead: Fixed variable Rs. 34,000 21,250 18,700 32,300 32,500 42,750 19,350 32,900