Consider an industry with the following features Budgeted monthly fixed cost Rs 2 20 000 Normal mont...........

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Consider an industry with the following features:

Budgeted monthly fixed cost = Rs.2,20,000

Normal monthly output = 12000 per standard labour hour

Standard variable overhead rate = Rs.25 per labour hour

What would be the total factory overhead rate?

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EPFO APFC (2015)

Rs 40.33 per labour hour

Rs 41.67 per labour hour

Rs 42.67 per labour hour

Rs 43.33 per labour hour

To find the total factory overhead rate, add the fixed overhead per hour to the variable overhead rate.

- Fixed overhead per hour:

- Budgeted fixed cost = Rs 2,20,000

- Normal output = 12,000 per hour

- Fixed overhead per hour = Rs 2,20,000 / 12,000 = Rs 18.33 per labour hour

- Variable overhead rate = Rs 25 per labour hour

- Total factory overhead rate:

- Rs 18.33 (fixed) + Rs 25 (variable) = Rs 43.33 per labour hour

Correct Answer: Option:4 i.e. Rs 43.33 per labour hour

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