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Unformatted text preview: • Get started – use Flexible Budget o Why? Control of cost o The actual OH cost should be compared to the flexible budget for that actual level of activity. I. Flexible Budget a) Cost driver (DLH, MH) b) Flexible budget shows VOH and FOH at various levels of cost driver Ex: Budgeted production = 3000 units at denominator level (used to compute POHR or SP) • POHR = estimated OH/estimated cost driver • Denominator level HAS to be in terms of the cost driver NOT production units • POHR remains unchanged all year in order to apply OH to products uniformly • Denominator level = level used to compute POHR ** Only time you use Budgeted Production is to compute POHR (convert first)...
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This note was uploaded on 08/25/2010 for the course ACCT 208 taught by Professor Kingery during the Spring '08 term at University of Delaware.
- Spring '08