Advance management accounting

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Ajay Patwari (Querist)
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22 February 2019 "factory overhead are absorbed at blanket rate of 20% of direct labour"
Is factory overhead variable cost or fixed cost?
In institute practise manual it is taken in variable cost.
Please reply urgently..

Amol S Joglekar

Amol S Joglekar (Expert)
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07 June 2019 normally factory overhead is regarded to be Fixed.
Since in this example it is linked with direct labour, it is to be treated as variable.

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