Aqa Accounting- Overheads And Overhead Absorption

Front 1

What is the allocation of overheads?

Back 1

Allocation of overheads is the charging to a particular cost centre of overheads that are incurred entirely by that cost centre.

Front 2

What is the apportionment of overheads?

Back 2

Apportionment of overheads is the sharing of overheads over a number of cost centres to which they relate. Each cost centre is charged with a proportion of the overhead cost. With apportionment a suitable basis must be found.

Front 3

What is the calculation for overhead absorption rate?

Back 3

OAR = total budgeted cost centre overheads / total planned work in the cost centre

Front 4

How is the cost treated when there is a service department which doesn't have any cost units to which their overheads may be charged?

Back 4

The cost is re-apportioned.

Front 5

What is cost-plus pricing and what is the calculation it uses?

Back 5

Cost-plus pricing is where a mark-up is added to the cost price in order to determine the selling price.
cost price + profit = selling price

Front 6

Define direct costs.

Back 6

Direct costs can be identified with each unit of output

Front 7

Define indirect costs.

Back 7

Indirect costs do not relate to particular units of output, but must be shared amongst all the cost units to which they relate.