Can someone please explain the meaning of Supplementary Overhead rate and how do we apply it in solving problems of cost sheet in costing ?
Regards,
Sumanta.
4 Replies
(Guest)
i knw overhead rate but i don knw wats supllementary...
Costing has 2 approaches either Absorption costing or marginal costing..
Absorption costing is used to find the cost of a product ,latter is for decision making.
over head rate =total over head/total machine hrs
Overhead rate p.u.-simply multiply by hrs reqd pr unit.
mounika
(semi qualified chartered accountant)
(981 Points)
Replied 14 August 2011
I THINK SUPPLIMENTARY RATE IS USED WHEN ACTUAL AMOUNT OF UNDER/ OVER ABSORPTION IS GIVEN IN D PROBLEM. SRY IF I AM WRONG
Sumanta Das Gupta
(Accountant)
(310 Points)
Replied 15 August 2011
Thank you for your replies. According to costing books, if the difference between over/underabsorption is significant, supplementary rate is used. But the question is, how do we calculate this rate and apply to the problems of costing ?
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