Escolar Documentos
Profissional Documentos
Cultura Documentos
FOUR
OVERHEAD
Learning Outcomes
At
the end of this topic, students should be
able to :
Define & classify overhead cost
Allocate & apportion overhead costs to different cost
centers.
Reapportion overhead costs of service cost center to
production cost center.
Calculate absorption of overhead into product costs.
Calculate over or under absorption of overhead.
Recap-Cost Classification!!
NATURE IDENTIFIABILIY
MATERIALS = DIRECT MATERIALS + INDIRECT
MATERIALS
+ + +
Overhead
2 methods of reapportionment:
1. Direct Method – When there is only 1 service cost
center
2. Repeated Method (reciprocal) – When there is >
1service cost center
Remember!!!
Overhead cost
Reapportion to
Absorbed all OH
production cost
cost incurred by
center until become
service cost center
zero/insignificant
Basis of Reapportionment
SERVICE CENTRE COMMONLY USED BASIS FOR
REAPPORTIONMENT
Maintenance Maintenance Labour Hour
Maintenance Wages
Plant Values
Machine Hours
Stores No. of Material Requisition Notes
Weight of Material Issued
Personnel No. of Employees
Labour Hours
Power Generation Meter Usage / Kwh
Cafeteria/ No. of Employees
Canteen
OVERHEAD ANALYSIS SHEET
Functions :
To show the overhead charged to each cost
center.
Only indirect cost are recorded in the overhead
analysis sheet.
Steps to follow:
1. Calculation of Total Overhead
2. Calculation of Production Overhead
3. Calculation of OAR
4. Calculation of Overhead Absorbed
5. Calculation of over / under overhead absorption ( compare
overhead absorbed vs actual overhead)
Overhead Analysis Sheet
Wyant Manufacturing Bhd-page 105/100
Overhead Absorption Rate (OAR)
Direct
Machine
Materials Prime Cost
Hour
Cost
Direct Direct
Unit of
Labour Labour
Production
Hour Cost
Calculation of OAR
OAR = Total Budgeted Production Overhead
Total Budgeted Basis*
Direct Apportionment
Allocation
Absorption
(OAR)
PRODUCTS COST
OVERHEAD ANALYSIS SHEET
Steps to follow:
1. Calculation of Total Overhead
2. Calculation of Production Overhead
3. Calculation of OAR
4. Calculation of Overhead Absorbed
5. Calculation of over / under overhead absorption
( compare overhead absorbed vs actual
overhead)
Past Year Questions
Sept 2015
March 2015
Sept 2014
March 2014
Sept 2013
March 2013
Oct 2012
THE END