ch3 - Ch 3 Predetermined Overhead Rate (POR) $$ of OH and...

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Unformatted text preview: Ch 3 Predetermined Overhead Rate (POR) $$ of OH and Production Units # $ # Q1 $ Q2 # $ # $ # Q3 Production Units: Planned $ Fixed Cost: Budget Q4 Quarters Predetermined overhead rates are typically needed for indirect costs as the actual per unit cost for a short period could be volatile and unreliable. Ch 3 Predetermined Overhead Rate ADM2341 1 POR Example • What if ? • In Q1 • Production = 2,000 units • Overhead expenditure = $12,000 • In Q2 • Production = 4,000 units • Overhead expenditure = $12,000 • Alternative is use of POR • If planned production for the year is 12,000 units • Overhead expenditure is $48,000 • Then POR! Ch 3 Predetermined Overhead Rate ADM2341 2 ...
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