Please answer Question 3.7

OVERHEAD RECOVERY RATE
OVERHEAD RECOVERY RATE        3
SUBJECT: OVERHEAD RECOVERY RATE
a.
Calculation of Pre-determined absorption rates:
Predetermined absorption rate as on December 31
    Particulars
    Machining department
    Hand finishing department
    Fixed costs
    600,000
    360,000
    Estimated machine Hrs. / Labor hrs.
    80,000
    120,000
    Pre-determined o/h rate (Fixed cost/ Estimated hrs.)
(Machining dept = 600,000/ 80,000)
(Hand finishing department = 360,000/120,000)
    7.50
    3.00
b. Calculation of Under- absorption/ over absorption of...