Accounting For Factory Overhead

Front 1

Factory overhead costs that vary in direct proportion to the level of production .

Back 1

Variable factory overhead cost

Front 2

Remain constant within the relevant range regardless of the varying levels of production

Back 2

Fixed factory overhead cost

Front 3

Management's operating plans expressed in quantitative terms

Back 3

Budget

Front 4

Neither wholly fixed nor wholly variable in nature but has characteristics of both

Back 4

Mixed factory overhead costs

Front 5

Most commonly used base or denominator in the computation of the predetermined factory overhead rate

Back 5

Direct labor hours

Front 6

Most simple method to use because units produced are readily available

Back 6

Units of production

Front 7

Used when either a single product is being manufactured or when the different product being manufactured passes through the same series of productive departments

Back 7

Single plantwide factory application rate

Front 8

Preferable with the different products being manufactured either do not pass through the same series a productive departments or have the similar amounts of applied factory overhead

Back 8

Multiple departmental factory overhead application rates

Front 9

Ignores any service rendered by one service department to another

Back 9

Direct method

Front 10

Sequential method of allocation . Recognize the services rendered by service departments to other service departments and is more complicated because it requires a sequence of allocation

Back 10

Step method

Front 11

Reciprocal method . Allocates costs by explicitly include in the mutual services rendered among all departments

Back 11

Algebraic method

Front 12

Capacity to produce at full speed without interruptions

Back 12

Theoretical , maximum or ideal capacity

Front 13

Capacity of production that provides allowance for circumstances that may result to stoppage of production

Back 13

Practical capacity

Front 14

Capacity concept based on a short range outlook which is feasible only for firms whose products are seasonal

Back 14

Expected actual capacity

Front 15

Capacity of production taking into consideration the utilization of the plant facilities to meet commercial demands

Back 15

Normal capacity

Front 16

Account for each kind of overhead expense according to their nature is opened in the ledger

Back 16

Non controlling account system

Front 17

Overhead control account is opened in the general red river in the overhead incurred are charged in the subsidiary ledger is maintained to show in detail the nature and account of the expense

Back 17

Controlling account system

Front 18

The variance due to expense factors

Back 18

Spending variance

Front 19

The variance due to the difference in volume and activity factors

Back 19

Idle capacity or volume variance