Budgeted overheads ₹2,00,000; budgeted machine hours 40,000. Machine-hour rate is:
A₹4
B₹5
C₹6
D₹8
Answer & Solution
Correct answer: B. ₹5
1. Machine-hour rate = budgeted overheads / budgeted machine hours.
2. Substitute the given values: 2,00,000 / 40,000.
3. = ₹5 per machine hour.
4. This rate is applied to actual machine hours per job to absorb overhead.
_Source: ICAI BoS Inter Paper 3, Ch 4 "Overheads", §4.5.2 Illus 4_
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