1/14/2024 0 Comments Foh inventory meaningThe efficiency variance occurs because the the amount of units to which the factory overhead was allocated varied from the standard amount of production that had been expected when the allocation rate was set up. The spending variance occurs because the actual amount of factory overhead expenditure incurred in the period was different from the standard amount that had been budgeted at some point in the past. This difference is caused by either a spending variance or an efficiency variance. The range of possible factory overhead costs can be quite extensive, depending upon the size and complexity of a factory operation and the level of detail at which costs are recorded.Īfter factory overhead is allocated to inventory, the amount actually allocated will vary from the standard amount that had been budgeted to be allocated. Insurance on production facilities and equipment Related AccountingTools CoursesĬost Accounting Fundamentals Examples of Factory OverheadĮxamples of factory overhead costs are noted below: The allocation of factory overhead to units produced is avoided under the direct costing methodology, but is mandated under absorption costing. The allocation of factory overhead is required when producing financial statements under the dictates of the major accounting frameworks. It is charged to expense when the produced units are later sold as finished goods or written off. Factory overhead is normally aggregated into cost pools and allocated to units produced during the period. ![]() Factory overhead is the costs incurred during the manufacturing process, not including the costs of direct labor and direct materials.
0 Comments
Leave a Reply. |
AuthorWrite something about yourself. No need to be fancy, just an overview. ArchivesCategories |