Example 2
Job 123 has the following cost items:
Actual DM: 2000$
Actual DL: 500$
Actual factory overhead rate: 10$/machine hr. "In direct manufacturing rate"
Budgeted factory overhead for man. Dep.: 8000$
Actual machine hours: 28 hrs. Of job "Actual allocation base"
Budgeted machine hrs. For manufacturing dep.: 800hrs
No. of units produced: 200 units
Required:
Compute cost per unit under both actual costing and normal costin
The solution:
So,
At the end of the year, we will have 2 figures
1-total actual overheads
2-total applied or allocated overheads
We calculated the total for the dep. As a whole "for all jobs"
& as a result for those 2 approaches, we will find that:
Actual data might be < total applied overheads "this means over allocated overheads"
Actual data might be > total applied overheads "this means under allocated overheads"
Actual data = total applied overheads "this means no over or under Allocated overheads"
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