Costing and Control of Factory
(Manufacturing) Overheads
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Factory Overhead Costs
Factory overheads represent all indirect manufacturing costs.
Unlike direct costs, these costs cannot be conveniently
and wholly charged to product cost centres. Examples of
factory overheads are as follows:
 Indirect materials and indirect labour.
 Factory rent, rates, lighting, power, and fuel.
 Depreciation on factory plant and equipments and factory
building.
 Insurance, repairs and maintenance of factory plant and
equipments and building.
 Storekeeping, toolroom costs.
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All factory overhead costs find their way into production
costs through a somewhat difficult method of allocations and
apportionments and reallocations and reapportionments.
Allotment of common costs/factory overheads to cost
centres/cost objects/cost units is often made on a somewhat
arbitrary basis. Cost allocation procedures are costly as they
use the time of cost accountants and decision-makers.
Therefore, cost allocation should be justified on the basis of
cost-benefit considerations. Yet, cost allocation is necessary
to determine the true cost of products, particularly in the case
of multi-product firms.
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Costing and Control of Factory
Overheads
(i) Determination of
Factory Overheads
(ii) Allocation of
Overheads
Application role
(iii) Absorption of
Overheads
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(iv) Under/over
Absorption of
Overheads
1. Factory Overhead Application Rate
Factory overhead absorption rate can either be actual
overhead rate or a predetermined overhead rate.
Normally, a predetermined overhead rate is preferred, the reason
being:
(a) It is useful in ‘bidding’ cases to determine quotation prices;
(b) It enables individual jobs to be costed immediately on their
completion; and
(c) Such a rate levels out the fluctuations which may be caused by
variations in actual factory overhead costs and/or actual level
of activity.
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Predetermined overhead rate is determined dividing budgeted
factory overhead costs for the coming period/year
by capacity level.
Two key factors to determine the factory overhead
application rate for a period are:
a) To select a volume/level of production (more commonly
referred to as capacity) to be used as a base for applying
factory overheads to production (denominator) and
b) To budget factory overheads at the capacity selected
(numerator).
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Concept of Capacity
1. Maximum or Theoretical Idle Capacity
It refers to the volume of production that a particular
production department or factory is capable of producing if
the plant were in continuous operation at peak efficiency at
all times.
2. Practical Capacity:
Practical capacity is the maximum capacity expected when
the plant operates at a planned level of efficiency.
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3. Normal or Long-run Productive Capacity:
Normal capacity is equal to, or less than, practical capacity
depending on the volume of expected sales.
4. Expected or Short-run Actual Capacity:
It is the volume of production required to meet the
estimated/projected demand for the next period/year (that is in a
single year only). Thus, expected actual capacity differs from
normal capacity in the length of time to determine capacity base;
this measure does not smoothen out cyclical variations in sales
that are likely to occur over a period of time as it is guided by one
year projections only.
Among four capacity measures, normal capacity (based on longrun productive capacity) is considered as the best denominator
measure.
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Example 1
The Hypothetical Manufacturing Company Ltd wishes to determine
various capacity levels both in terms of production units and
machine-hours.
One machine-hour produces 10 units of finished product. The
production department in which the machine is located normally
operates 6 days a week (except Sunday) on a single, eight-hour
shift. The plant is closed for 10 working days each year for holidays.
Plant is closed for 200 hours each year for its repairs and
maintenance. Normal sales demand averages 20,000 units a year
over a 5-year period (extensive product changes are made every five
years).
The expected sales volume for the next year is 19,000 units. Show
the machine-hours and production capacity at the four levels.
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Solution
Machine-hours and production capacity at 4 levels of capacity are shown in
Table 1.
Table 1: Capacity at Various Levels
Capacity
Details of computation
1.
2.
3.
4.
Machine Production units
-hours
@ 10 units per
hour
Maximum capacity (365 days ×8
hours per day)
Practical capacity
Maximum capacity (in hours)
Less idle capacity:
Sundays (52 days ×8 hours)
Holidays (10 days ×8 hours)
Plant maintenance
Normal capacity
Expected capacity
2,920
29,200
2,224
2,000
1,900
22,240
20,000
19,000
2,920
416
80
200
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Budgeted Factory Overhead
Costs
Once the estimated level of production (capacity) has been decided, a
manufacturing firm prepares a budget of expected production/factory
overheads likely to be incurred in the next year. For estimating
budgeted factory overheads, past historical cost data are
normally taken as the base and adjustments are made
for likely changes in prices/rates of various cost
constituents of factory overheads.
Format 1: Determination of Budgeted Factory Overhead Costs
Total budgeted fixed factory overheads
--————
Add variable factory overheads
(Budgeted capacity level x Budgeted variable
overhead rate)
—————
Total
_________
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Example 2
For Hypothetical Ltd in Example 1, assume further that the budgeted fixed
overhead costs are estimated at Rs 6 lakh and variable overhead costs at Rs.
100 per unit as the basis of determining factory overhead application rate.
Compute the factory overhead application rate.
Solution
Table 2: Determination of Factory Overhead Application Rate
(a) Total budgeted fixed overheads
Fixed overhead costs
Variable overhead costs (2,000 hours × Rs. 100)
(b) Normal capacity (machine-hours)
(c) (i) Factory overhead application rate (Rs. 8,00,000/2,000) per
hour
(ii) Factory overhead application rate (Rs. 8,00,000/20,000
units) per unit
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Rs 6,00,000
2,00,000
8,00,000
2,000
400
40
Cost Allocation
Cost common to more than one department are to be allocated
among the production departments receiving benefits, and
service department costs are to be distributed
among producing departments.
The cost allocation process is comprised of three basic activities.
1)
Accumulating the costs on the basis of department or
division or product.
2)
Identifying the cost objects or recipients of the allocated
costs, say, a unit of product or a department.
3)
Selecting a method for relating the costs so accumulated to
the cost objects.
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Labour-related Factory Overheads
(Say supervisor’s salaries, canteen expenses) are usually allocated on the
basis of number of employees, direct labour-hours, wages paid or similar
other labour related criteria.
Machine-related Factory Overheads
(Say insurance, maintenance, depreciation) are normally allocated on the
basis of machine-hours, current book value of machinery, number of
machines, or similar other machine-related criteria.
Space-related Factory Overheads
(Say factory building rent and insurance, lighting, maintenance of building)
are usually allocated on the basis of space occupied or similar other spacerelated criteria.
Service-related Costs
(Say materials handling, utility) are normally allocated on the basis of value,
quantity, time and similar other service related criteria.
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Departmental Rates
(1) Direct Departmental Costs
These are the costs which can be easily traced to specific departments. For
instance, indirect materials used in production department (say X) can be traced
through requisitions on store and can wholly be allocated to department X;
likewise, indirect labour (foreman’s and supervisor’s salaries) wholly engaged in
department X can be traced through payroll records; the same applies for
depreciation on machines and plants exclusively used in the department X and
annual maintenance contact payment for these machines.
(2) Indirect Departmental Costs
These are the costs which are common to more than one department and,
hence, need to be shared/apportioned among the departments receiving
benefits. Building occupancy costs (such as rent, maintenance and light);
factory insurance premium, power charges for machine operations
(where there are no separate metres for departments) are the major costs
included in this category.
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Charging Cost of Service
Department
(i) Direct
method
(ii) Step method
(iii) Repeated
distribution
method
(iv) Algebraic
method
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Direct Method
According to direct method, total budgeted
costs of service departments are apportioned
between/among
production
departments,
ignoring any services provided by service
departments to each other.
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Example 3
A manufacturing company has 5 service departments and 2 production departments.
The total budgeted costs for the period for each department were as follows:
Service Departments:
Building and grounds
Rs 1,00,000
Personnel
10,000
General factory and administration
2,60,900
Cafeteria
16,400
Storeroom
26,700
Production Departments:
Machinery
3,47,000
Assembly
4,89,000
The following schedule was prepared to assist in allocating service department costs:
Direct
Number of
labour-hours employees
Building
and
grounds
Personnel
General
factory
administration
Cafeteria
Storeroom
Machinery
Assembly
—
—
—
—
—
5,000
15,000
20,000
—
—
35
10
5
50
100
200
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Square
feet
—
2,000
7,000
4,000
7,000
30,000
50,000
1,00,000
Total labourhours
Number of
requisitions
—
—
—
1,000
1,000
8,000
17,000
27,000
—
—
—
—
—
2,000
1,000
3,000
The company management decided that the appropriate bases used by
each service department would be the following:
Building and grounds
Personnel department
General factory administration
Cafeteria
Storeroom
Square feet
Employees
Total labour-hours
Employees
Requisitions
Direct labour-hours are used as the basis for computing the production
dapartment’s factory overhead application rates.
You are required to allocate the total budgeted costs of the service
departments by using direct method. Also, determine the factory overhead
absorption rates for the production departments.
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Solution
Table 3: Determination of Factory Overhead Absorption Rates for Production Departments (Machinery and Assembly)
Items
Budgeted costs
Cost of service
departments
apportioned to
production
departments:
Building and
grounds
Personnel
General factory
administration
Cafeteria
Storeroom
Basis of
charge
Allocation
Square feet
ratio (3:5)
Employees
(1:2)
Total
labourhours (8:17)
Employees
(1:2)
Requisitions
(2:1)
Total cost
Service departments
Production
departments
Building and
grounds
(Rs)
Personnel
(Rs)
General
factory
administratio
n (Rs)
Cafete
ria
(Rs)
Store
room
(Rs)
1,00,000
10,000
2,60,900
16,400
26,700
(1,00,000)
(10,000)
(2,60,900)
—
—
Direct labour-hours
Factory overhead absorption rate
(Total cost/Direct labour-hours)
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—
Machinery
(Rs)
Assembly
(Rs)
3,47,000
4,89,000
37,500
62,500
3,333
83,488
6,667
1,77,412
10,933
8,900
(16,40
0)
(26,700)
5,467
17,800
—
—
4,94,588
7,55,412
5,000
15,000
98.92
50.36
Step Method
In situations when one service department renders services to another (that
is reciprocity exits), the step method is more appropriate than
the direct method. This method takes into consideration the
total/true cost of each service department (and not partial)
in assigning them to production departments.
The following is a list of steps used for the purpose of apportioning
budgeted costs of service departments.
(i) It is usual to apportion first the cost of that service department which
renders services to the largest number of other service departments.
(ii) The budgeted costs of the service department that renders services to
the next largest number of service departments are then apportioned.
(iii) This sequence is continued, step-by-step, until all the budgeted service
department costs have been apportioned departments.
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Using the facts given in Example 3, cost apportionment of service departments as per Step method
is shown in Table 4.
Table 4: Determination of Factory Overhead Absorption Rates for Production Departments
(Machinery and Assembly)
Items
Basis of
charge
Service departments
Building
and
grounds
(Rs)
Budgeted costs
Distribution of
factory
overheads of:
Building and
grounds
Personnel
General
factory
administration
Cafeteria
Storeroom
Total cost
Allocation
1,00,000
Square feet
ratio
Employees
Total
labourhours
Employees
Requisitions
(1,00,000)
—
Production
departments
Personn
el
(Rs)
General
factory
administra
tion (Rs)
Cafeteri
a
(Rs)
Store
room
(Rs)
Machin
ery
(Rs)
Assemb
ly
(Rs)
10,000
2,60,900
16,400
26,700
3,47,000
4,89,000
2,000
7,000
4,000
7,000
30,000
50,000
(12,000)
2,100
600
300
3,000
6,000
(2,70,000)
10,000
(31,000)
—
—
10,000
1,000
(45,000)
—
80,000
10,000
30,000
5,00,000
1,70,000
20,000
15,000
7,50,000
5,000
100
15,000
50
—
Direct labour-hours (DLH)
Factory overhead absorption rate
(Total cost/DLH)
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Repeated Method
The process of apportioning service departments overhead according
to repeated distribution method is continued until the figures
of unapportioned sum(s) of service department(s)
become negligible.
The following steps are involved in its application.
(i) The first service department’s (to be identified on the basis of the order
in which their names are stated) budgeted costs are to be apportioned.
As a result, the balance of the first service department becomes nil; its
costs are apportioned among other departments.
(ii) The budgeted costs of the second service department (consisting of
original amount plus the apportioned sum from the first service
department) is to be apportioned among other departments including
the first service department.
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(iii) This process continues for all the remaining/other service
departments.
(iv)The second phase of cycle starts once again with the first service
department; it will consist only of apportioned amounts from
other service departments. As a result, the total costs of service
departments becomes less and less with each phase of
apportionment.
(v) The process comes to an end when it is found that the residual
sum (to be apportioned) has been either exhausted or has
become virtually insignificant.
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Example 4
A company has three production departments and two service departments.
Distribution summary of overheads is as follows:
Production departments:
A
B
C
Service departments:
X
Y
Rs 13,600
14,700
12,800
9,000
3,000
The expenses of service departments are charged on a percentage basis,
which is as follows:
Department
A
B
C
X
Y
X
40
30
20
—
10
Y
30
30
20
20
—
Apportion the cost of service departments by using the repeated distribution
method.
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Solution
Table 5: Apportionment of Cost of Service Departments to Production Departments
particulars
Production departments
A
Primary apportionment
Department X overheads
apportioned in ratio of (4:3:2:1)
Department Y overheads (Rs 3,900)
apportioned in the ratio of (3:3:2:2)
Department X overheads (Rs 780)
apportioned in the ratio of 4:3:2:1
Department Y overheads (Rs 78)
apportioned in the ratio of 3:3:2:2
Department X overheads (Rs 16)
apportioned in the ratio of 4:3:2:1
Department Y overheads (Rs 2)
apportioned in the ratio of 3:3:2:2
Total
Service departments
B
C
Rs 13,600
Rs 14,700
Rs 12,800
Rs 9,000
Rs 3,000
3,600
2,700
1,800
(9,000)
900
1,170
1,170
780
780
(3,900)
312
234
156
(780)
78
23
23
16
16
(78)
6
5
3
(16)
2
1
18,712
1
18,833
—
15,555
—
—
(2)
—
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X
Y
Algebraic Method
The algebraic method is the most appropriate of all the four
methods when reciprocal services exist between service
departments.
This method is also called the reciprocal services method as it
takes into account cost flows in both directions between service
departments that render services to each other. This is typical for
the service departments to provide services to each other in most
of the manufacturing firms in practice.
This method provides conceptually the most correct budget cost
estimates of service departments and their subsequent
apportionment.
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Example 5
Royal Industries Ltd has 2 service (SD) and 2 production departments (PD). It
employs the algebraic method to allocate budgeted service department costs.
The following information is available:
Services provided by
Department
Total costs:
SD A
SD B
Factory overhead costs:
PD1
PD2
Direct labour-hours (DLH):
PD1
PD2
Budgeted costs Department A
Department B
Rs 1,00,000
2,00,000
—
35 %
20 %
—
1,40,000
60,000
5,00,000
15
50
100 %
45
35
100 %
20,000
10,000
From the above information, you are required to: (a) Allocate the service
departments costs to production departments. Use algebraic equation method,
(b) Compute factory overhead absorption rate, based on direct labour-hours.
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Solution
(a) Let X be the total overhead costs of SD A and Y be of SD B
X = Rs 1,00,000 + 0.20Y
Y = Rs 2,00,000 + 0.35X
Substituting,
X = Rs 1,00,000 + 0.20 × (Rs 2,00,000 + 0.35X) = Rs 1,00,000 + Rs
40,000 + 0.07X = Rs 1,40,000/0.93 = Rs 1,50,538
Y = Rs 2,00,000 + 0.35 × (Rs 1,50,538) = Rs 2,52,688
Allocation of Overheads Among Production Departments
Items
Production Departments
P1
Direct overheads
SD A (15:50)
SD B (45:35)
Total
Rs 1,40,000
22,581
1,13,709
2,76,290
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Total
P2
Rs 60,000
75,269
88,441
2,23,710
Rs 2,00,000
97,850
2,02,150
5,00,000
Working Notes
1. Total expenses of SD A
Less share of SD B (0.35 × Rs 1,50,538)
Amount to be divided between production departments
2. Total expenses of SD B
Less share of SD A (0.20 × Rs 2,52,688)
Amount to be divided between production departments
Rs 1,50,538
52,688
97,850
2,52,688
50,538
2,02,150
(b) Factory Overhead Absorption Rate (based on DLH) for Production
Departments
For P1 (Rs 2,76,290/20,000, DLH)
For P2 (Rs 2,23,710/10,000, DLH)
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Rs 13.8145
22.3710
Absorption of Factory Overheads
Factory overheads of production departments (inclusive of
appropriate apportioned share from other services
departments) are to be applied to production/jobs.
Some common bases of absorption of factory
overheads are:
1) Units of production
4) Prime cost method
2) Direct materials cost
5) Direct labour-hours
3) Direct labour cost,
6) Machine-hours
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(1) Unit of Production
According to units of production method, the factory overhead absorption
rate = Estimated/budgeted factory overhead costs ÷ Estimated/budgeted
units of production.
(2) Direct Material Cost Method
Direct material cost method, the overhead recovery rate in terms of
percentage of direct material cost = (Estimated/budgeted factory overhead
cost/Estimated direct material cost) x 100.
3. Direct Labour Costs Basis/Method
The factory overhead rate according to direct labour cost method =
(Estimated factory overhead cost/Estimated direct labour cost) x 100.
4. Prime Cost Method
According to prime cost method the factory overhead rate = (Estimated
factory overhead cost/Estimated prime cost) x 100.
5. Direct Labour-hours
The factory overhead absorpation rate per direct labour hour = Estimated
factory overhead costs ÷ Estimated direct labour-hours.
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Machine-hour Rate
According to the machine-hour rate, the factory
overhead absorption rate per machine-hour
(MHR) = Estimated factory overhead
costs ÷ Estimated machine-hours.
Since most of the work is done through machines,
machine-hour rate is normally adopted to
absorb factory overheads.
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In case where production department has several machine (serving different
needs), the factory overheads among different machines (each
machine/block of machine constitutes a cost centre) should be apportioned
on equitable basis. For instance
1) rent and rates, lighting and heating costs can be apportioned on the
basis of effective floor space occupied (that is, allowing for reasonable
space to operate the machine);
2) insurance may be apportioned on the basis of book value of machines;
3) depreciation may be computed on the basis of effective cost of the
machine and its effective useful life in hours;
4) power costs should be charged on the basis of actual units consumed;
5) supervision costs are to be apportioned on the basis of the degree of
supervision required by each machine.
Similarly, other production departments costs are to be apportioned on the
most equitable basis. The estimated productive machine-hours should be
based on effective hours for which the machine works. It should exclude
time lost due to setting-up of the machine and its maintenance.
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Further, total overheads related to machine should be normally
segregated in two categories: fixed costs (commonly called standing
charges), and variable costs (referred to as machine expenses) for cost
control purposes, as also for decision-making purposes. Included in
machine expenses are depreciation, power, repairs and maintenance;
standing charges include rent and rates, general lighting, insurance, and
supervisor’s salary.
Where the work performed by direct labour personnel is identifiable with
a particular machine group, their direct wages should be included as part
of the machine group cost. Thus production/job will be charged with a
machine-hour rate which is inclusive of direct wages. Such a rate is
known as comprehensive machine-hour rate.
Direct labour-hour rate (where factory overhead costs consist primarily of
labour activity) and machine-hour rate (where indirect manufacturing
costs predominantly comprise of machine-related activity) are the two
suitable methods. Further, for cost control and decision-making
purposes, factory overhead absorption rate should be computed
separately both for fixed costs and variable costs.
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Example 6
Compute the machine-hour rate from the following data:
Cost of machine
Rs 3,00,000
Estimated scrap value after the expiry of its useful life (5 years)
50,000
Rent and rates for the shop per month
2,000
General lighting for the shop per month
1,500
Insurance premium for the machine per annum
4,800
Repairs and maintenance expenses per annum
5,000
Power consumption — 10 units per hour @ Rs 2 per unit
Estimated working hours per annum 2,200 (including settingup time of 200 hours; no power is required during setting-up
time)
20
Shop supervisor’s salary per month
6,000
The machine occupies one-fourth of the total area of the shop. The
supervisor is expected to devote one-fifth of his time for supervising the
machine.
Determine machine-hour rate.
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Solution
Determination of Machine-hour Rate
Particulars
Rate per
hour
Standing charges:
Rent and rates (Rs 2,000 per month × 12)/4
General lighting (Rs 1,500 per month × 12)/4
Insurance premium per annum
Shop supervisor’s salary (Rs 6,000 per month × 12)/5
Total standing charges
Productive working machine-hours (2,200 – 200,
setting-up time)
Standing charges per hour (Rs 29,700/2,000)
Machine expenses*:
Repairs and maintenance expenses (Rs 5,000/2,000
hours)
Depreciation [(Rs 3 lakh – Rs 0.5 lakh)/5years] ÷ 2,000
hours
Power consumption per hour
Machine-hour rate per hour
*are in the nature of mixed and variable costs.
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Rs 6,000
4,500
4,800
14,400
29,700
2,000
2.5
25.0
20.0
Rs 14.85
47.50
62.35
UNDERABSORPTION AND OVERABSORPTION
OF FACTORY OVERHEADS
When predetermined factory overhead applied rate is used as the basis of
absorption of indirect manufacturing costs, it is seldom that the total
factory overhead costs applied to production (or jobs) in a given period
are equal to the total factory overhead costs incurred in that period.
When the absorbed factory overheads exceed the actual, it is a situation
of overabsorption; under-absorption results when the actual factory
overhead costs exceed the factory overheads charged to production.
Under-absorption of factory overheads =
Actual factory overheads – Overheads charged to production
Overabsorption of factory overheads =
Overheads charged to production – Production overheads
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Journal Entries: Overhead Variance Treated as a Period Cost
Cost of Goods Sold A/c . . . . . ………. . Dr
To Factory Overhead Control A/c
(For charging under-absorbed factory overheads)
Factory Overhead Control A/c . . . . . . . Dr
To Cost of Goods Sold A/c
(For adjusting over-absorbed factory overheads)
Journal Entries: Overhead Variance Considered as the Cost of Production
Work-in-process Inventory A/c . . . . . . .
Dr
Finished Goods Inventory A/c . . . . . . .
Dr
Cost of Goods Sold A/c . . . . . . .
Dr
To Factory Overhead Control A/c
(For charging under-applied factory overheads)
Factory Overhead Control A/c . . . . . . .
Dr
To Work-in-process Inventory A/c
To Finished Goods Inventory A/c
To Cost of Goods Sold A/c
(For adjusting over-applied factory overheads)
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Example 7
In a manufacturing unit, factory overhead was recovered at a
predetermined rate of Rs 25 per manday. The total factory overhead
expenses incurred and the mandays actually worked were Rs 41.50
lakh and 1.5 lakh, respectively. Out of the 40,000 units produced
during a period, 30,000 were sold.
On analysing the reasons, it was found that 60 per cent of the
unabsorbed overheads were due to defective planning and the rest
were attributable to increase in overhead costs.
How would unabsorbed overheads be treated in cost accounts?
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Solution
Determination of Unabsorbed Factory Overheads
Factory overhead expenses incurred
Less factory overheads absorbed (1,50,000 mandays × Rs 25
per manday)
Unabsorbed factory overheads
Rs 41,50,000
37,50,000
4,00,000
Treatment of Unabsorbed Factory Overheads:
(1) 60 per cent of unabsorbed overheads are
attributed to defective planning. Being abnormal
in nature, Rs 2,40,000 (0.60 × Rs 4 lakh) is charged
to costing profit and loss account
Rs 2,40,000
(2) Rs 1,60,000 is to be pro-rated between cost of
goods sold (30,000 units) and finished goods
inventory (10,000 units):
— Cost of goods sold (Rs 1,60,000 × 3/4)
Rs 1,20,000
— Finished goods inventory (Rs 1,60,000 × 1/4)
40,000
1,60,000
4,00,000
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Example 8
The XYZ Ltd has the following information relating to applied and actual
factory overheads for the current month:
Factory overheads, incurred
Applied factory overheads
Rs 1,52,500
1,98,500
Applied factory overhead costs are in the following accounts:
Cost of goods sold
1,60,000
Ending work-in-process inventory
17,500
Ending finished goods inventory
21,000
You are required to allocate the under or overapplied factory overheads to
relevant accounts and pass necessary journal entries at the month-end.
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Solution: Overapplied/Overabsorbed Factory Overheads:
Applied factory overheads
Less factory overheads incurred
Rs 1,98,500
1,52,500
46,000
Over-absorbed factory overheads will be pro-rated in the
following accounts:
Cost of goods sold (Rs 1,60,000/Rs 1,98,500) × Rs 46,000
Ending work-in-process inventory (Rs 17,500/Rs1,98,500) ×
Rs 46,000
Ending finished goods inventory (Rs 21,000/Rs 1,98,500) ×
Rs 46,000
37,078
4,055
4,867
46,000
Journal Entries:
Factory Overhead Applied A/c. . . . . . .
To Over-applied Factory Overhead A/c
To Factory Overhead Control A/c
Dr
Overapplied Factory Overhead A/c. . . . . . .Dr
To Cost of Goods Sold A/c
To Ending Work-in-process Inventory A/c
To Ending Finished Goods Inventory A/c
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Rs 1,98,500
Rs 46,000
1,52,500
46,000
37,078
4,055
4,867