company absorbs factory overheads at a rate of N$25 per direct labour hour. During 2021, cost of finished goods produced and cost of goods sold were N$210 000 and N$207 500, respectively. Closing balance of finished goods was N$15 000. Calculate the value of opening balance for the period.

company absorbs factory overheads at a rate of N$25 per direct labour hour. During 2021, cost of finished goods produced and cost of goods sold were N$210 000 and N$207 500, respectively. Closing balance of finished goods was N$15 000. Calculate the value of opening balance for the period.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Question

A company absorbs factory overheads at a rate of N$25 per direct labour hour. During 2021, cost of finished goods produced and cost of goods sold were N$210 000 and N$207 500, respectively. Closing balance of finished goods was N$15 000.

Calculate the value of opening balance for the period.

Definition Definition Indirect costs incurred while producing goods or services. Overhead costs cannot be directly attributed to products or services. Overhead includes indirect material cost, indirect labor cost, rent, utilities expenses, and depreciation. Since these costs directly affect the profitability of a company, managing overhead becomes an important task for management.

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