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ZS Co. has so far charged actual factory overhead to production. The system has not been proved satisfactory and, therefore, the company has decided to charge factory overhead on the basis of predetermined rate. Accordingly the following estimates have been made for the next year: Direct Labor 2,00,000 hours @ $10 Fixed Factory Overhead $1,00,000 Variable Factory Overhead $1,20,000 Semi Variable Overhead: Indirect Material (40% fixed) $80,000 Indirect Labor (65% variable) $92,000 Carriage outward (30% fixed) $1,16,000 Required: Factory overhead recovery rates on the basis of direct labor cost and direct labor hours. The recovery rates if the direct labor hours were 1, 80,000 @ tk 12

ZS Co. has so far charged actual factory overhead to production. The system has not been proved satisfactory and, therefore, the company has decided to charge factory overhead on the basis of predetermined rate. Accordingly the following estimates have been made for the next year: Direct Labor 2,00,000 hours @ $10 Fixed Factory Overhead $1,00,000 Variable Factory Overhead $1,20,000 Semi Variable Overhead: Indirect Material (40% fixed) $80,000 Indirect Labor (65% variable) $92,000 Carriage outward (30% fixed) $1,16,000 Required: Factory overhead recovery rates on the basis of direct labor cost and direct labor hours. The recovery rates if the direct labor hours were 1, 80,000 @ tk 12

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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ZS Co. has so far charged actual factory overhead to production. The system has not been proved satisfactory and, therefore, the company has decided to charge factory overhead on the basis of predetermined rate. Accordingly the following estimates have been made for the next year:
Direct Labor 2,00,000 hours @ $10
Fixed Factory Overhead $1,00,000
Variable Factory Overhead $1,20,000

Semi Variable Overhead:
Indirect Material (40% fixed) $80,000 Indirect Labor (65% variable) $92,000

Carriage outward (30% fixed) $1,16,000

Required:

  1. Factory overhead recovery rates on the basis of direct labor cost and direct labor hours.
  2. The recovery rates if the direct labor hours were 1, 80,000 @ tk 12
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