07 Feb The cost accounts of ABC Chemicals Ltd., determine
The cost accounts of ABC Chemicals Ltd., determined the overhead recovery rate for the year 200607 (based on direct labor hours) with the following estimates.Indirect labor Rs. 1,15,000Inspection Rs. 70,000Factory supervision Rs. 50,000Depreciation and maintenance Rs. 1,25,000Total Factory Overheads Rs. 3,60,000Direct labor hours 75,000Hourly wages rate Rs. 15The actual results for the year are as follows Particulars Amount in Rupees Indirect labor 99,000 Inspection 73,000 Factory supervision 51,000 Depreciation and maintenance 1,15,000 Total actual factory overheads 3,38,000 Direct labor hours Hrs 67,600 Hourly wage rate Rs. 16Calculate the predetermined overhead recovery rate and find out the amount of over/under absorptionif any.How will you treat the over/under absorption amounts in Cost Accounts?