A factory estimates overhead of Rs. 600,000 and 30,000 direct labour hours for the coming period. What predetermined overhead rate should it use per direct labour hour?
Correct answer: C. Rs. 20 per hour
- A. Rs. 15 per hour
- B. Rs. 30 per hour
- C. Rs. 20 per hour
- D. Rs. 50 per hour
Explanation
The predetermined overhead rate is estimated overhead divided by estimated activity. Rs. 600,000 divided by 30,000 direct labour hours gives Rs. 20 per hour.
Report an error
The more specific you are, the faster it gets fixed. A source beats an opinion.
Prefer email? [email protected]
About Cost Accounting
Cost accounting measures and analyses the cost of producing goods or providing services for planning, control and pricing decisions. It covers direct and indirect costs, fixed and variable costs, job and process costing, break-even analysis, marginal costing, overhead allocation, and the difference between product cost and period cost.
Practise Cost Accounting
941 free Cost Accounting MCQs from Accounting, each with the correct answer and an explanation. Unlimited attempts, no account needed.
Discussion
Stuck on an option, or know a faster way to get there? Ask or explain it here.
No comments yet. Be the first to explain this one.
Exams that ask Accounting questions like this
Accounting is on 2 papers prepared for on TestUstad, and all of them draw the same bank, so this question is worth knowing for every one of them.
More Cost Accounting questions
A product sells for Rs. 80 per unit and has a variable cost of Rs. 50 per unit. What is its contribution margin ratio?
A product sells for Rs. 50 per unit, has a variable cost of Rs. 30 per unit, and total fixed costs are Rs. 120,000. What is the break-even output?
Process costing is most appropriate when a business produces:
Which item is normally included in the product cost of manufactured goods?
Under marginal costing, which cost is generally excluded from the inventory valuation of finished goods?
A company has fixed costs of Rs. 90,000 and a contribution margin ratio of 30 percent. What sales revenue is required to break even?