A department in a factory is working at 55% of its normal capacity. Due to shortage of labour and mate- riats, it charges manufacturing overheads to work-in-progress as a percentage of direct labour. For the current year, the budgeted direct labour cost is $2,50,000 and budgeted manufacturing overhead is * 2,25,000 (fixed 1,00,000 and variable 1,25,000). A dispute has arisen as to the percentage of direct labour which should be charged to work-in-progress. One accountant claims that it should be 90%; another claims that it should be much less than that. Give your opinion and a brief reason for the same