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Unformatted text preview: 1 Ch 11 Overhead ADM2341 C h. 11 Fixed and Variable Overhead (Note the key word here is application , especially for fixed overhead) Overhead goes to work in process When? How much? 2 Ch 11 Overhead ADM2341 If Actual costing is used : • transfer OH $ to WIP at end of each period. Problems: 1. Lack of cost info during period. 2. Fluctuations in: a) overhead costs per month and b) volume per month 3 Ch 11 Overhead ADM2341 Actual vs Applied Overhead • Factory overhead is a product cost • Need to apply MOH on some pre-determined basis because of volatility in both the incurrence of overhead and the cost driver on a monthly or weekly basis • Dispose of difference between actual ana applied at the end of the period 4 Ch 11 Overhead ADM2341 Fixed Manufacturing Overhead and Predetermined Overhead Rates • Use a P.O.R. to apply overhead to work-in- process and determine the "full" cost of products....
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- Winter '07