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Recovery rate of fixed Overhead

Accountancy

What it is necessary to calculate predetermined recovery rate of fixed Overhead Can anyone explain me with an example?

Snehashis Mohanty

CA Inter

★ 35

15-Dec-22 20:01

622

Answers (6)

Say you have rent expense of factory. That is a cost attributable to inventory. To determine the rate at which you should include cost per unit, you add pre determined overhead recovery rate

CA Suraj Lakhotia

Admin

15-Dec-22 21:06

CA Suraj Lakhotia Admin

Say you have rent expense of factory. That is a cost attributable to inventory. To determine the rate at which you should include cost per unit, you add pre determined overhead recovery rate

It means the division of cost of factory rent within each units of the actual production.

Thread Starter

Snehashis Mohanty

CA Inter

★ 35

15-Dec-22 21:10

Yes. Since you dont know actual overhead for the year in advance, you estimate and determine an overhead recovery rate

CA Suraj Lakhotia

Admin

15-Dec-22 21:15

CA Suraj Lakhotia Admin

Yes. Since you dont know actual overhead for the year in advance, you estimate and determine an overhead recovery rate

Thread Starter

Snehashis Mohanty

CA Inter

★ 35

15-Dec-22 21:17

Once you learn cost accounting you will be able to understand more on this.

CA Suraj Lakhotia

Admin

15-Dec-22 21:21

CA Suraj Lakhotia Admin

Once you learn cost accounting you will be able to understand more on this.

Thread Starter

Snehashis Mohanty

CA Inter

★ 35

15-Dec-22 21:21