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When you “apply” overhead to WIP, I thought these were actual expenses that were incurred.
Like in the COGM formula:
Beginning WIP
plus Direct Material used
plus Direct labor
plus Mfg OH “APPLIED”
equals
Total Mfg costs INCURREDminus ending WIP
equals
COGMSo, “applied” is included in total costs that were actually INCURRED
But, in learning about OH variance, “applied” is used as the budgeted amount and not the actual amount.
So, I’m confused about how to think about it.
Is it actually a BUDGETED amount of OH that is used in the COGM formula ???
FAR - 86 - 2/27/14
AUD - 75 - 5/29/14
BEC - 80 - 8/31/14
REG - 89 - 2/27/15
Praise Jesus! I'm done!!Study resources:
Becker
Wiley test bank
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