COST ACCOUNTING &

CONTROL
N O V. 1 2 , 2 0 2 1
 1. I d e n t i f y C o s t
Behavior
2. S e p a r a t e s e m i
variable costs to
OBJECTIVES variable and
fixed components.
3. A c c o u n t f o r
applied and
actual factory
overhead

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 COST
BEHAVIOR
FIXED VERSUS VARIABLE

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 MIXED COSTS
Mixed costs or semi-variable costs have
properties of both fixed and variable costs
due to the presence of both variable and fixed
components in them.

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 ACCOUNTING FOR ACTUAL AND
APPLIED FACTORY OVERHEAD
APPLIED VERSUS ACTUAL OVERHEAD
APPLIED FACTORY OVERHEAD

• Amount of overhead is calculated based on predetermined overhead

rate

• Recorded as credit to Manufacturing Overhead

ACTUAL FACTORY OVERHEAD

• Actual annual factory overhead costs

• Recorded as debit to Manufacturing Overhead

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 EXAMPLE
• BBM Co. estimated its overhead related
to machine usage to be Php 120,000 for
If we want to apply overhead to jobs. Job 101 had 875 machine
the year and estimated the machine hours and Job 102 had 4,050 machine hours. The calculation
usage for the year to be 60,000 machine- for actual overhead for each job would be:
hours. Thus, the predetermined
overhead rate would be calculated as
follows:
JOB MACHINE HRS POHR APPLIED FO
101 875 2.00 1,750

• POHR = 102 4050 2.00 8,100

Total applied 9,850
FO
120,000/60,000 = 2

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 CONTINUATION: EXAMPLE
• BBM Co. estimated its overhead related
to machine usage to be Php 120,000 for
What if BBM Co.’s Actual Factory Overhead is Php 10,550
the year and estimated the machine
usage for the year to be 60,000 machine- Difference between the Applied and Actual Overhead will be
charged to Over/Under applied Factory Overhead.
hours. Thus, the predetermined
overhead rate would be calculated as FACTORY OVERHEAD
follows:
ACTUAL APPLIED
• POHR = 10,550 9,850

120,000/60,000 = 2

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 EXERCISE PROBLEMS

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 EXERCISE PROBLEMS

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 THANK YOU
NEXT STEPS:
 Answer Short Assessment in the QUIZ
Ta b
 Prelim Exam: Nov 18, 2021 @ 6PM
 Midterm Exam: Nov 20, 2021 @ 7PM

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