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Economics, Accounting & Business: Post your doubts here!

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Direct labour hour rate is 5.4 per hour and each unit takes 4 hours. which means OAR is 5.4 multiplied by 4. (21.6)

And as the question states that it is under absorbed which means overhead absorbed is less than incurred cost, we deduct 32400 from 518400. (486000)

Then it is divided by the oar amount 21.6 to give the actual units produced 22500 units.
 
Messages
322
Reaction score
112
Points
53
Direct labour hour rate is 5.4 per hour and each unit takes 4 hours. which means OAR is 5.4 multiplied by 4. (21.6)

And as the question states that it is under absorbed which means overhead absorbed is less than incurred cost, we deduct 32400 from 518400. (486000)

Then it is divided by the oar amount 21.6 to give the actual units produced 22500 units.
thanks alot
 
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