Actual Manufacturing overhead will be charged to the Cost of Goods sold. However there is always a predetermined cost of Manufacturing i.e the Absorbed cost , which is unlikely to be the same as Actual Manufacturing cost, which therefore will result in an over or under absorbed cost.
Incase of over absorption overhead there will be a credit in income statment of the difference (actual - Absorbed= Negative)
incase of under absorption overhead there will be a debit in income statement of the difference (actual - Absorbed= Positive)
May 16th, 2015
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