2. COSTING FOR FACTORY
OVERHEAD
Cost Accounting
Presented By:
Fahad Farooq
Osama Waheed
Hamza Iltaf
Huzaifa Ijaz Minhas
Presented to: Ma’am Shumaila
3. Cost Accounting:
• Cost accounting is a form of managerial accounting that aims to
capture a company's total cost of production .
• It assess the variable costs of each step of production as well as fixed
costs.
• Cost accounting is used internally by management in order to make
fully informed business decisions.
• Cost accounting is not required to adhere to set standards and can be
flexible to meet the needs of management.
8. Factory Overhead:
• Factory overhead is the costs incurred during the manufacturing process, not
including the costs of direct labor and direct materials.
• Factory expenses (e.g., rent, rates, insurance, water, heat, and electricity).
• Factory maintenance (e.g., cleaning, servicing, repairs, oiling, and greasing).
• Depreciation of factory plant and machinery and buildings.
• Consumable stores and all forms of indirect material.
• Wages and salaries (other than direct labor) of persons engaged in the factory.
9.
10.
11. Factory Overhead Variance:
• Difference between Actual FOH incurred and Applied FOH during the year.
• Under applied FOH is regarded as unfavorable sign.
Actual FOH > Estimated FOH = Unfavorable
• Overapplied FOH is regarded as favorable sign.
Actual FOH < Estimated FOH = Favorable