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Unformatted text preview: • If overhead allocation was overstated (estimated is greater than actual) and is not material o Credit cost of goods sold • If difference is material, apportion among inventory accounts • How do manufacturers tread non-manufacturing costs? o GAAP • Only inventoriable product costs added to the costs of assets (inventory) o Internal decision-making • Management wants to know the total cost of the product across the value chain • Job costing at a service firm o Similar to job costing at a manufacturer o Examples • Hospitals • Repair shop • Consulting firm o Main difference is that company is allocated indirect period costs to each client rather than manufacturing costs o Since no inventory, no journal entries necessary...
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- Spring '06
- overhead allocation base, Overhead allocation