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managerial accounting

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Actual manufacturing overhead costs should be charged to what account and should it be as they are incurred?

Mar 25th, 2015

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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