4 Accounting For Factory Overhead
4 Accounting For Factory Overhead
4 Accounting For Factory Overhead
Defective Work
Depreciation
Employee Fringe Benefits
Fuel
Heat and Light
Indirect Labor
Indirect Materials
Insurance
Janitorial Service
Lubricants
Maintenance
Materials Handling
Overtime Premium
Plant Security
Power
Property Tax
Rent
Repairs
Small Tools
Spoilage
Supplies
Telephone/Fax
Water
Workers Compensation
Insurance
AC9
Volume
Volume
Fixed
Variable
Volume
Volume
Semivariable Type A
Semivariable Type B
1. BASE TO BE USED
Cost
Cost
Cost
A. Physical output
B. Direct materials Cost
C. Direct labor Cost
D. Direct labor Hours
E. Machine Hours
A. Normal Capacity
B. Expected actual capacity
A. Absorption Costing
B. Direct Costing
FACTORS TO BE CONSIDERED IN
THE COMPUTATION OF THE
OVERHEAD RATE
AC9
Job 100
Direct materials
Job 100
$1,000
Direct materials
3,000
1,500
$5,500
$1,000
Direct materials
3,000
Direct labor
3,000
1,200
$5,200
Direct materials
3,000
Job 100
AC9
$1,000
Direct labor
$7,000
$1,000
3,000
1,500
$5,500
Units of production
Service Departments
Building Maintenance
Production volume
Machine Shop
Human Resources
Purchasing
Shipping
Stores
Tool Room
AC9
1.
2.
3.
Capacity Production
AC9
Capacity Production
XX
XX
XX
Factory Overhead
XX
Factory Overhead
Cost of Goods Sold
Under- and Overapplied Factory
Overhead
AC9
XX
XX
XX
XX
Overhead Variance
Given:
Budgeted FOH:
Solution:
Actual FOH
Budgeted FOH:
600,000
P 640,000
200,000
P 640,000
P 600,000
340,000
P 940,000
Applied FOH:
(200,000 x 2.70)
Illustration
P 540,000
Overhead Variance
600,000
Fixed OH cost
Variable OH Cost (1,020,000/600,000)X200,000
Total Budget Allowed
AC9
Fixed OH cost
P
Variable OH Cost P 1,020,000
Budgeted DL Hours
Actual FOH
Actual DL Hours