Job Order Costing: Overhead Allocation and Absorption Flashcards
What are overheads
Indirect costs
How to compute the plantwide overhead rate / overhead absorption rate by using 1 driver
Step 1) Find the cost driver
Step 2) Add up all overheads/indirect costs
Step 3) Find the overhead absorption rate by doing total overhead cost / cost driver in q
How to figure out how much overhead is allocated for each job
Rate x cost driver
How to work out the full production cost
total direct costs + total indirect costs
How to allocate overhead costs to each department with a cost centre approach
Step 1) Find out what cost driver they are associated with.
Step 2) Multiply cost driver by the meters. If associated with more then one, find the range of the metres and multiply range by all the metres
What are the operating centres
Assembly and fitting
What are the service centres
Personnel
How to re-allocate the costs of the service cost centre to the two operating centres using the no. of employees as allocation basis.
Get the total service centre total costs divide by the total employees of the two operating centres
times answer by number of employees in the two operating centres
How to compute the pre-determined overhead rate for centres based on a cost driver
Add that centre total costs and reallocated costs (or if you have, total overhead costs)
that total divided by total cost driver
same with other centre
How to work out costs applied to job x
total costs for job + total overhead costs
How to work out amount under or over applied
Predetermined overhead rate x actual cost of driver
If bigger then MOHC then overapplied, vice versa
if under applied, take away MOHC from whats under applied to get whats actually under applied
if over applied, take that away from MOHC to see by how much over applied
if numbers not making sense do rate as a %
