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General fixed overheads refer to the ongoing business expenses that do not fluctuate with production levels. These costs typically include rent, salaries, utilities, and insurance, which remain constant regardless of the volume of goods or services produced. Understanding these overheads is crucial for budgeting and financial analysis, as they impact overall profitability and pricing strategies.
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What is the difference between variable overheads cost variance andfixed overheads cost variance?
Variable overhead cost variance is that variance which is in variable overheads costs between the standard cost and the actual variable cost WHILE fixed overheads cost variance is variance between standard fixed overhead cost and actual fixed overhead cost.
Difference between marginal cost accounting statements and absorption cost accounting statement?
marginal costing considers only direct) materials,labour,expenses and variable factory overheads excluding fixed factory overheads but absorption considers (direct) materials ,labour,expenses,variable and fixed factory overheads.
How do you calculate fixed manufacturing overhead?
Fixed Overhead are costs which do not alter based on production- even if you produced 0 units you would still have to pay it. Example would be Factory Space Rental/ Equipment Rental. The Fixed Overhead can be allocated per unit for absorption by Direct Labour Hours/ Machine Hours/Units of Raw Material. (The indicator of absorbtion is usually the same as that for variable overheads). thus Total Fixed Overheads/ Indicator units x # of Indicator Units used= Fixed Overheads to be absorbed per unit
Differentiate between fixed and variable overheads. which one of them is controllable and what is the effect of controlling overheads on contribution margin and finally on per unit cost?
A fixed overhead will remain the same regardless of production levels while a variable overhead will change in relation to production levels. Controlling Overheads will reduce per unit costs thereby increasing contribution margin.
Difference between absorption and marginal costing?
marginal costing is recommended by IAS and absorption costing is not recommended by IAS,marginal costing is used for internal purposes and absorption costing is ysed for external purposes,in marginal costing the fixed production overheads are not calculated as a product cost and in absorption costing the fixed prodution overheads are calculated as product cost.
What is the difference between variable overheads cost variance andfixed overheads cost variance?
Variable overhead cost variance is that variance which is in variable overheads costs between the standard cost and the actual variable cost WHILE fixed overheads cost variance is variance between standard fixed overhead cost and actual fixed overhead cost.
What is difference between fixed overhead and variable overhead?
The difference between fixed overhead and variable overhead is that fixed overheads are the ones that do not change regardless and variable overheads are the ones that vary depending on the number of units that it produces. An example of fixed overhead is a managers salary.
When calculating total cost do you add in variable manufacturing overhead fixed manufacturing overhead or both?
Following is the formula for total costtotal cost = fixed overheads + variable overheads + direct labor + direct material
Difference between marginal cost accounting statements and absorption cost accounting statement?
marginal costing considers only direct) materials,labour,expenses and variable factory overheads excluding fixed factory overheads but absorption considers (direct) materials ,labour,expenses,variable and fixed factory overheads.
How do you calculate fixed manufacturing overhead?
Fixed Overhead are costs which do not alter based on production- even if you produced 0 units you would still have to pay it. Example would be Factory Space Rental/ Equipment Rental. The Fixed Overhead can be allocated per unit for absorption by Direct Labour Hours/ Machine Hours/Units of Raw Material. (The indicator of absorbtion is usually the same as that for variable overheads). thus Total Fixed Overheads/ Indicator units x # of Indicator Units used= Fixed Overheads to be absorbed per unit
Differentiate between fixed and variable overheads. which one of them is controllable and what is the effect of controlling overheads on contribution margin and finally on per unit cost?
A fixed overhead will remain the same regardless of production levels while a variable overhead will change in relation to production levels. Controlling Overheads will reduce per unit costs thereby increasing contribution margin.
Difference between absorption and marginal costing?
marginal costing is recommended by IAS and absorption costing is not recommended by IAS,marginal costing is used for internal purposes and absorption costing is ysed for external purposes,in marginal costing the fixed production overheads are not calculated as a product cost and in absorption costing the fixed prodution overheads are calculated as product cost.
What is the difference between variable overhead cost variance and fixed overhead variance?
direct or indirect cost which increases or decreases with production are variable overheads such as, indirect material, indirect labor, utilities, maintenancd expansis etc. expansis which does not fluctuate with increase or decrease of production called fixed overheads such as rent, salaries, insurance, professional membership like ISO etc.
What is meant by the terms under-absorption and over-absorption of fixed overheads how they arise and how they are calculated?
Over or Under AbsorptionNote that as long as planned level of activity and the actual level of activity is not the same there is always an Over or Under Absorption situationThis is because overhead absorption rate is set at the start of the period based upon an expected level of production and that during the period, the level of output and or overheads will be different from the planned overheads and or output.OVER-absorption occurs when the total overhead recovered or absorbed is GREATER than the actual level of overheads for the period.UNDER-absorption occurs when the total overheads recovered or absorbed is LESS than the actual overheads incurred in the period.
What is fixed cost and variable cost in managerial accounting?
Variable costs are costs that change depending on how many items you produce or sell. For instance the raw matterial. Whereas fixed cost are similar to overheads, they do not change based on production.
What is the biggest markups in restaurants eating out?
The general rule in the restaurant industry is to mark up food at 3 times your costs including overheads.
What are the causes for adverse overhead capacity variance?
Incurring higher fixed costs than were planned for in the budget can cause adverse overhead capacity variance. Other caused can include planning errors, inefficient management of fixed overheads, and business expansion that was not added to the budget.
