Date- 26/2/2013

M.M. - 40

Success Coaching Centre Sec-4 & sec-14 Ph.9782016302, 9672269750, 9784094650 Overheads Test Paper

Time: 1 hour

Q.NO.-1) Kanpur metals uses 3 idential big and 6 indentical small machines. The working hours of each of the machine are 1,800 hours per year while the effective working life is taken to be 20,000 hours for each big machine and 12,000 hours for each small machine. The cost of each big machine is Rs. 10,300 and each small machine is Rs. 3,100. Scrap values are Rs. 300 and Rs. 100 respectively. Each big machine occupies 1/6th the workshop area and small machine 1/12th of the workshop area. Each big machine employs 6 workers and small machine 4 workers. Big machine consume 5 units of electric power per hour and small machine one unit per hour, cost per unit being 6 paise. Repairs and maintenance are estimated at Rs. 2,500 and Rs. 750 for each big and small machine respectively for the whole life. The manager is paid Rs. 450 per month. Half of his time is devoted to machine supervision, which is to be divided equally on all 9 machines. Other expenses incurred during the month are as under: Rs. Rent of the workshop 600 Lighting (to be divided in the ratio of workers employed) 126 Insurance-Big machine (each) 6.00 And- Small machine (each) 4.50 Taking a period of one month as basis, calculate the machine hour rates for a big and a small machine separately. Q.NO.-2) In a factory department a machine costs Rs. 10,500. It is expected that it will work for about 20,000 hours and its scrap value is estimated at Rs. 500. The rent of the factory department is Rs. 800 p.m. and 25% of the area of the department is utilized for conducting the machine. One supervisor & one attendant are employed on a salary of Rs. 200 & Rs. 100 p.m. respectively to work on one more machine of a similar type. The expenses of the month incurred in the department are as follows: Light charges for the department Rs. 80, having 16 points in all, out of which only 4 points are used at this machine. Total power used for two machines of equal horse power Rs. 360; indirect labour for the machine Rs. 50 and repairs and maintenance Rs. 40. You are required to find out the Machine hour rate for one month when it is expected to work for 200 hours in a month. Q.NO.-3) The total overheads expenses of a factory are Rs. 4, 50,608. Taking into account the normal working of the factory, overheads was recovered in production at Rs. 1.25 per hour. The actual hours worked were 2, 93,104. How would you proceed to close the works accounts assuming that besides 7,800 units produced of which 7,000 were sold, there were 200 equivalent units in work in progress. On investigation it was found that 50% of the unabsorbed overheads were on account of increase in the cost of indirect material, indirect labour and the other 50% was due to factory inefficiency. Q.No. 4) What do you mean by allocation and apportion of overhead? Difference between allocation and apportionment of overheads. Q.No. 5) What is meant by overheads? How can these be classified? Explain with examples.