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In a manufacturing unit, overheads were recovered at a predetermined rate of $25...

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Accounting

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In a manufacturing unit, overheads were recovered at a predetermined rate of $25 per manday. The total factory overhead expenses incurred and the man-days actually worked were $41.50 lakh and 1.50 lakh days, respectively. Out of the 40,000 units produced during a period, 30,000 were sold. On analysing the reasons, it was found that 60 per cent of the unabsorbed overheads were due to defective planning and the rest were attributable to increase in overhead costs. How would under/over-absorbed overheads be treated in cost accounts

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