Question

If the company's overhead cost allowance is 30 eur per direct working hour, and the realized direct working hours of the calculation period were 5300 and the realized overhead costs were 153000, how much under-budgeted costs have arisen during the calculation period? What were the budgeted overheads for the period?

Answer 1

The company's budgeted overheads were 159,000 EUR for the period, and the realized overhead costs were 153,000 EUR. The under-budgeted costs that have arisen during the calculation period are 6,000 EUR.

Step-by-step explanation:

To calculate the under-budgeted costs, we first need to determine the budgeted overheads for the period. The overhead cost allowance is 30 EUR per direct working hour, and there were 5300 direct working hours. Thus, the budgeted overheads are calculated by multiplying the overhead cost allowance by the number of direct working hours.

Budgeted Overheads = Overhead Cost Allowance per Hour × Direct Working Hours
Budgeted Overheads = 30 EUR/hour × 5300 hours = 159,000 EUR

The realized overhead costs were 153,000 EUR, which is the actual amount spent. To find the under-budgeted costs, we subtract the realized overhead costs from the budgeted overheads.

Under-budgeted Costs = Budgeted Overheads - Realized Overhead Costs
Under-budgeted Costs = 159,000 EUR - 153,000 EUR = 6,000 EUR

The company was under-budgeted by 6,000 EUR for the period.