Raw materials purchased = 197,000 Issued Direct Material = 187,000 Indirect Material = 19,000 Direct Labor = 121,000 Indirect Labor = 29,000 OH Rate
Raw materials purchased = 197,000
Issued Direct Material = 187,000
Indirect Material = 19,000
Direct Labor = 121,000
Indirect Labor = 29,000
OH Rate = 150%
Actual OH = 183,000
What was the amount of applied
Overheads is indirect cost of production. For e.g factory rent , electricity, wages of supervisors , salaries , depreciation etc are forming part of overheads. Generally overheads are attributable on the basis of direct labour hours or machine hours and are applied accordingly. After applying at a predetermined rate we get actual overheads from accounts later . But we need not wait for it as we have predetermined overhead rate calculated on direct labour hours or machine hours. When we get actual overheads from accounts we can adjust over or under absorption as the case may be in the accounts by passing suitable entries.
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