Computation of overhead recovery rate, Cost Accounting

Compute the rate to be used in each department for applying overhead in both departments

Budegeted Cost sheet

 

Amount in $

 

Dept. A

Dept. B

Direct materials

       120,000

          150,000

Direct labor

         37,500

          145,000

Prime Cost

       157,500

          295,000

Overheads

       122,500

          100,000

Total Product cost

       280,000

          395,000

 

 

 

 

2

Computation of total budgeted labor cost for department B

 
 

 

Amount in $

 
 

 

Dept. B

 
 

Total product cost

       395,000

 
 

Less: direct materials

       150,000

 
 

Less: Overheads

       100,000

 
 

 

 

 
 

Budgeted labor cost for department B

       145,000

 
 

 

 

 
       
 

Computation of overhead recovery rate:

 

 

 

 

Dept. A

Dept. B

 

Total overheads (a), $

       122,500

          100,000

 

Basis of recovery

labour hours

machine hours

 

Budegted labor / machine hours (b)

           2,500

              5,000

 

Overhead recovery rate (a/b)

           49.00

              20.00

       
Posted Date: 7/23/2012 2:31:03 AM | Location : United States







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