In a small factory, overheads of a particular department are recovered on the basis of `50 per machine-hour. The total expenses incurred and the actual machine-hours for the department for the month...

In a small factory, overheads of a particular department are recovered on the basis of `50 per machine-hour. The total expenses incurred and the actual machine-hours for the department for the month of August were `8,00,000 and 10,000 respectively. Of the amount of `8,00,000, `1,50,000 became payable due to an award of the Labour Court and `50,000 was in respect of expenses of the previous year booked in the current month (August). Actual production was 40,000 units, of which 30,000 units were sold. On analysing the reasons, it was found that 60 per cent of the under-absorbed overhead was due to defective planning and the rest was attributed to normal cost increase. How would you treat the under-absorbed overhead in the cost accounts?