Factory overhead costing and

control

Presented by: Ayesha Javed

Cost behavior analysis
 Fixed Cost
 Variable Cost
 Semi-Variable Cost

Factory Overhead
 Indirect Material
 Indirect Labor
 Other Indirect manufacturing costs
Distribution of Overhead

 Classification of overhead
✓ On the Basis of Function
✓ On the Basis of Cost Behavior
✓ On the Basis of Cost element
 Collection of Overheads
 Allocation of production overhead
 Apportionment of production overhead
Cont…
 Re-apportionment of service overheads
➢ Secondary Apportionment Methods
✓ Non Reciprocal Apportionment
✓ Reciprocal Apportionment
• Repeated Apportionment method
• Algebric Method
Cont…
 Absorption of Overhead
➢ Methods
✓Percentage of Direct Labor Cost
Factory Overhead Rate = Amount of Production Overheads/
Direct Labor Cost x 100
✓Direct Labor Hours
Factory Overhead Rate = Amount of Production Overheads/
Direct Labor Hours
✓Machine Hours Rate
Factory Overhead Rate = Amount of Production Overheads/
Machine Hours
Cont…
✓Percentage of Direct Material Cost
Factory Overhead Rate = Amount of Production Overheads/
Direct Cost Material x 100

✓Percentage of Prime Cost

Factory Overhead Rate = Amount of Production Overheads/
Prime Cost x 100

✓ Rate Per Unit Of Production

Factory Overhead Rate = Amount of Production Overheads/
No. of Units of Production
The End