If a company is manufacturing 60,000 units which is at 60% of the potential capacity and fixed overhead per unit is given. While preparing Income statement for 60,000 units fixed overhead will be charged for 60000 units or for 100000 units and why?
Prerana (student) (161 Points)
15 May 2012If a company is manufacturing 60,000 units which is at 60% of the potential capacity and fixed overhead per unit is given. While preparing Income statement for 60,000 units fixed overhead will be charged for 60000 units or for 100000 units and why?
Tejas Jain
(Chartered Accountant)
(314 Points)
Replied 15 May 2012
it Should be Charged at 100000 Units not at 60000 units because while calculating Fixed Overhead Rate per unit compny cosiders the Potential capicity and not the actual capicity.
Tejas Jain
(Chartered Accountant)
(314 Points)
Replied 15 May 2012
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