Quote:
Originally Posted by wuuhoo
Ill take up on that offer. 
whats the difference between applied fix overhead and budgeted fix overhead?
I get the comparison between actual fix and budgeted fix, but WHAT THE HELL is applied fix overhead lol
I have my this sat night, I am pretty worried  |
Ok.
Budgeted is the amount derived via material from chapter 9 (budgeting chapter). It's generally "how much you think fixed overhead will cost this year." This number will be given.
Applied is in terms of how many cost driver it usually takes to make the thing times the predetermined overhead rate. So you have your overall fixed overhead budget and you divide it by the numbers of cost drivers this year; thus giving you a predetermined overhead rate.
Since you have to value the work-in-process or finished goods at a specific amount, you will "apply" a cost based on your predetermined rate and how many cost drivers you think you used to make it.
At the end of the year, what you "think it will cost overall [budgeted]," "what you think what you made cost [applied]" and "what it actually cost [actual]" will most likely be different.
The difference between actual and applied gives you your over/underapplied fixed overhead rate.