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How can managers use accounting information to help control manufacturing overhead costs?
Managers compare the actual line item amounts for manufacturing overhead with the budgeted amounts. Managers investigate large differences between actual and budgeted amounts to identify the reasons why actual costs differ from planned or budgeted costs.
How do you calculate applied overhead?
Many companies will have a 'historical' OVHD rate, or calculate a budgeted rate.Presuming budgeted or est-ovhd cost of 750,000Presuming budgeted or est-direct-labor 500,000Overhead rate = estimated overhead costs/estimated activity base750,000 / 500,000Overhead rate =1.5 or 150%Since job-labor is the basis for Applied Overhead,Applied overhead = rate from above x actual direct labor.1.5 510,000Applied overhead = 765Prorate the overhead variance to the appropriate accounts765 - 750 = variance of 15K
What is the difference between actual costs and budgeted costs?
Actual Costs are costs which have occurred and can be reliably measured. Budgeted Costs are costs which have been estimated, possibly by using Forecasted Costs.
Why are some budgeted costs based on actual costs from the previous years?
Some budgeted costs are based on actual costs of the previous year, information from supervisors about where resources might be more efficiently used, and subjective judgments about how much should be allowed for resources.
How does the planning of fixed overhead costs differ from the planning of variable overhead costs?
it doens't
How can managers use accounting information to help control manufacturing overhead costs?
Managers compare the actual line item amounts for manufacturing overhead with the budgeted amounts. Managers investigate large differences between actual and budgeted amounts to identify the reasons why actual costs differ from planned or budgeted costs.
Why some company uses budgeted overhead costs rather than actual costs?
the reason was: control the budget,
How do you compute predetermined overhead rate as a percentage of direct labor costs and direct labor hours?
Predetermined overhead rate based on direct labor cost = Budgeted overhead cost / direct labor cost / 100 Predetermined overhead rate based on direct labor cost = budgeted overhead cost / direct labor hours.
How do you calculate applied overhead?
Many companies will have a 'historical' OVHD rate, or calculate a budgeted rate.Presuming budgeted or est-ovhd cost of 750,000Presuming budgeted or est-direct-labor 500,000Overhead rate = estimated overhead costs/estimated activity base750,000 / 500,000Overhead rate =1.5 or 150%Since job-labor is the basis for Applied Overhead,Applied overhead = rate from above x actual direct labor.1.5 510,000Applied overhead = 765Prorate the overhead variance to the appropriate accounts765 - 750 = variance of 15K
What is the difference between actual costs and budgeted costs?
Actual Costs are costs which have occurred and can be reliably measured. Budgeted Costs are costs which have been estimated, possibly by using Forecasted Costs.
How do you calculate manufacturing overhead costs?
The total budgeted costs in an indirect-cost pool divided by the total budgeted quantity of cost-allocation base. For example: Manufacturing overhead = 900.000 and 25.000 machine hours. --> 900.000/25.000 = 36 dollar per machine hour
How do you calculate under and over applied OH?
To calculate under or overapplied overhead, subtract the actual overhead costs from the applied overhead costs. If the actual overhead costs exceed the applied overhead costs, it is overapplied. If the applied overhead costs exceed the actual overhead costs, it is underapplied.
How would you describe a budgeted cost?
Budgeted costs are generally described as the best estimate about what should be allowed for forthcoming activity.
Why are some budgeted costs based on actual costs from the previous years?
Some budgeted costs are based on actual costs of the previous year, information from supervisors about where resources might be more efficiently used, and subjective judgments about how much should be allowed for resources.
How do you calculate production volume variance?
Production volume variance is calculated by taking the difference between the actual production volume and the budgeted production volume, then multiplying that difference by the standard fixed overhead rate per unit. The formula is: [ \text{Production Volume Variance} = (\text{Actual Units Produced} - \text{Budgeted Units}) \times \text{Standard Fixed Overhead Rate per Unit} ] This variance helps to assess how well the actual production aligns with planned production levels and the impact on fixed overhead costs.
How does the planning of fixed overhead costs differ from the planning of variable overhead costs?
it doens't
How do we calculate budgeted level of activity in units?
To calculate the budgeted level of activity in units, you first need to determine the total budgeted costs and the variable cost per unit. Then, divide the total budgeted costs by the variable cost per unit. Additionally, you may consider any fixed costs and the expected sales demand to ensure the budget aligns with operational goals. This process helps in setting realistic production levels for the period.
