Budegeted Cost sheet

Amount in $

Dept. A

Dept. B

Direct materials

       120,000

          150,000

Direct labor

         37,500

          145,000

Prime Cost

       157,500

          295,000

Overheads

       122,500

          100,000

Total Product cost

       280,000

          395,000

2

Computation of total budgeted labor cost for department B

Amount in $

Dept. B

Total product cost

       395,000

Less: direct materials

       150,000

Less: Overheads

       100,000

Budgeted labor cost for department B

       145,000

Computation of overhead recovery rate:

Dept. A

Dept. B

Total overheads (a), $

       122,500

          100,000

Basis of recovery

labour hours

machine hours

Budegted labor / machine hours (b)

           2,500

              5,000

Overhead recovery rate (a/b)

           49.00

              20.00