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JAMB Principles of Accounts 2002 Question 23

Question 23

Manufacturing Accounts

Nasara Manufacturing Plc has three direct labour employees that work 40 hours each a week for 50 weeks a year. Factory overhead costs of ₦60,000 is distributed on the basis of direct labour hours. Compute the overhead rate

  1. A.₦12 per hour
  2. B.₦16 per hour
  3. C.₦10 per hour
  4. D.₦15 per hour.
Show the answer and explanation

Answer: C (₦10 per hour)

Explanation

Labour hours = 3 × 40 × 50 = 6 000. Rate = 60 000 ÷ 6 000 = ₦10 per hour.