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  • Budgeted Indirect Costs and End-of-Accounting-Year Adjustments

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    Abdullah Nafees
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    This document discusses approaches for handling under or over allocated indirect costs at the end of an accounting year. It presents an adjusted allocation-rate approach, proration approach, and writeoff to cost of goods sold approach for dealing with differences between budgeted and actual indirect costs. The document considers choosing among these approaches to properly account for such differences at year-end.

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    This document discusses approaches for handling under or over allocated indirect costs at the end of an accounting year. It presents an adjusted allocation-rate approach, proration approach, and writeoff to cost of goods sold approach for dealing with differences between budgeted and actual indirect costs. The document considers choosing among these approaches to properly account for such differences at year-end.

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    52 views17 pages

    Budgeted Indirect Costs and End-of-Accounting-Year Adjustments

    Uploaded by

    Abdullah Nafees
    This document discusses approaches for handling under or over allocated indirect costs at the end of an accounting year. It presents an adjusted allocation-rate approach, proration approach, and writeoff to cost of goods sold approach for dealing with differences between budgeted and actual indirect costs. The document considers choosing among these approaches to properly account for such differences at year-end.

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    © All Rights Reserved
    Download as PDF, TXT or read online from Scribd
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    Budgeted Indirect Costs and End-of-Accounting-Year Adjustments

    Under and Over allocated Indirect Costs


    Adjusted Allocation-Rate Approach
    Budgeted Actual
    1,080,000 1,215,000

    Rate $40 x 88 hours Rate $45 x 88 hours


    = 3,520 = 3,960
    Proration Approach
    Writeoff to Cost of Goods Sold Approach
    Choosing Among Approaches

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