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Fixed Overhead are costs which do not alter based on production- even if you produced 0 units you would still have to pay it. Example would be Factory Space Rental/ Equipment Rental.

The Fixed Overhead can be allocated per unit for absorption by Direct Labour Hours/ Machine Hours/Units of Raw Material. (The indicator of absorbtion is usually the same as that for variable overheads).

thus Total Fixed Overheads/ Indicator units x # of Indicator Units used=

Fixed Overheads to be absorbed per unit

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Q: How do you calculate fixed manufacturing overhead?
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Fixed MOH stands for fixed manufacturing overhead. It includes overhead costs that do not vary with production levels, such as rent on the manufacturing facility or management salaries. Fixed MOH is allocated to products based on predetermined rates or cost drivers.


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Following is the formula for total costtotal cost = fixed overheads + variable overheads + direct labor + direct material


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How fixed manufacturing overhead costs are shifted from one period to another under absorption costing?

Fixed manufacturing overhead costs are shifted from one period to another due to changes in inventories under absorption costing. Every unit that is produced is assigned some fixed manufacturing overhead costs. Assuming that the said unit is not sold during that period, the fixed manufacturing cost assigned to that unit will then become part of the inventory and reported on the balance sheet and not the cost of good sold.


What if budgeted manufacturing overhead is not equal to applied manufacturing overhead?

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what is plantwide manufacturing overhead


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No. Cost would include the cost of materials. Overhead would not.


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Depreciation is not a manufacturing labor rather it is manufacturing overhead as machines used in manufacturing is not part of labor rather it is part of overhead.


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Favourable fixed overhead variance occurs when actual fixed cost is less than the budgeted fixed overhead expenses.