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Factory overhead absorption rate of a pharmaceutical is Rs2.50. Budgeted Factory overhead at two activity levels is asfollows for that period.
Activity level
Budgeted factory overhead
Low
20,000 Hours
Rs. 45,000
High
40,000 Hours
Rs. 75,000
Actual Factory overhead for that period was Rs. 42,000 andactual volume was 25,000 hours.
Required:
i) Variable factory overhead absorption rate
ii) Budgeted variable factoryoverhead at high activity level 40,000 hours.
Innova also incurs 5% sales commission ($0.35) on each disc sold. Mudd Corporation offers Innova $4.75 per disc for 5,000 discs. Mudd would sell the discs under its own brand name in foreign markets not yet served by Innova.
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