04 Jan In a manufacturing unit, overhead was recovered at
In a manufacturing unit, overhead was recovered at a predetermined rate of Rs. 20 per labor hour. The total factory overhead incurred and the labor hours actually worked were Rs. 45,00,000 and2,00,000 respectively. During this period, 30,000 units were sold. At the end of the period 5,000 units were held in stock while there was no opening stock of finished goods. Similarly though there was no stock of uncompleted units at the beginning of the period, at the end of the period there were 10,000 incomplete units which may be reckoned as 50% complete. On analyzing the reasons, it was found that 60% of the unabsorbed overheads were due to defective planning and rest were attributed to increase in overhead costs.How would unabsorbed overheads be treated in cost accounts?
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