Find out the amount of production overhead: | Item | Rs. | |---|---| | Office stationery | 5,000 | | Factory lighting | 10,000 | | Works Manager's Salary | 22,000 | | Indirect Materials | 9,000 | | Audit fees | 13,000 | | Foreman's Salary | 13,000 | Hint: Ignore office stationery and audit fees.
Answer (1)
To determine the amount of production overhead, we need to identify which costs are related to the production process. In this problem, we're asked to ignore office stationery and audit fees, as these are not typically considered production overhead costs. Production overhead, also known as manufacturing overhead, includes all indirect costs associated with manufacturing a product that cannot be directly traced to a specific product.
Production overhead typically includes:
Factory Lighting : This is a cost incurred to maintain the factory and enable production.
Works Manager's Salary : This salary is a cost related to overseeing the production process.
Indirect Materials : These are materials used in production, but not directly traceable to a finished product.
Foreman's Salary : The foreman's salary is related to managing the day-to-day operations of production.
Let's add up these costs to find the total production overhead:
Factory Lighting: Rs. 10,000
Works Manager's Salary: Rs. 22,000
Indirect Materials: Rs. 9,000
Foreman's Salary: Rs. 13,000
Now, calculate the total:
Total Production Overhead = 10 , 000 + 22 , 000 + 9 , 000 + 13 , 000 = 54 , 000 Rs.
Therefore, the total amount of production overhead is Rs. 54,000.
