Normal Capacity : 1000 units
Actual Production : 3000 units
Fixed Producton OH : Rs 1,00,000
How much of the Fixed Production OH is to be allocated during inventory valuation and why?
According to me it is Rs 33.33 (Rs 1,00,000/ 3000 units)
2 Replies
Prashanth
(Chartered Accountant)
(2322 Points)
Replied 04 October 2011
Normal Capacity : 1000 units
Actual Production : 3000 units
Fixed Producton OH : Rs. 1,00,000
How much of the Fixed Production OH is to be allocated during inventory valuation and why?
According to me it is Rs. 33.33 (Rs 1,00,000/ 3000 units)
Ans:-According to AS-2 fixed allocation should be calculated based on Normal capacity.But,if the actual production exceeds the normal capacity in such case it should be calulated on actual production (i.e.100000/3000)
So Your answer is also correct.
The Dude
(Specialist- Finance)
(303 Points)
Replied 04 October 2011
@ Prasahanth can u plz quote the relevant paragraph in the AS for the same?
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