Accounting For Overhead
Accounting For Overhead
Accounting For Overhead
If:
1. To record various indirect cost
1. Actual overhead > Applied oh actually incurred
Overhead at the end of the period is under
applied (kulang) Factory overhead control Xx
2. Actual OH < Applies OH Salaries and wages payable Xx
Supplies inventory Xx
Over applied
Accu, depreciation xx
1. Overhead variance is immaterial
a. The amount of variance is closed FOCH Account: an account record used to
against COGS track and control the indirect manufacturing
b. Underapplied=COGS increase cost incurred in a production process
c. Overapplied= COGS decreases
2. Overhead Variance is material A suspense account that represents the
a. The amount is closed and accumulation of all manufacturing overhead
prorated against the accounts in cost during a specific accounting period.
which applied overhead resided:
Sample OH Dr. Cr.
WIP inv., FG inv. And COGS item
TYPES OF OVERHEAD Indirect Factory OH Salaries
labor payable
Indirect Factory OH Inventory or
OVERHEAD material supplies
function Elem Beha norm Controll Factory Factory OH Prepaid
s ents viour ality ability insurance insurance
producti Indir Fixed Nor Controll Factory Factory OH Accumulate
on ect mal able Depreciation d
mate depreciation
rial Taxes/ Factory OH Taxes and
Adminis Indir Varia abnor Uncontr utilities utilities
tration ect ble mal ollable payable
labor 2. Applying the overhead:
Selling Indir Semi
ect - WIP inv Xx
expe varia Manufacturing OG control xx
nses be (Amount is computed POHR multiplied by the
distribut activity volume for the period)
ion
3. Completion of work in process inv:
FG inv Xx
OVERHEAD JOURNAL ENTRIES
WIP inv xx
Absorption of Overhead
Cost Accounting