ACCT 202 Chapter Notes - Chapter 17: Deutsche Luft Hansa

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Oh can be assigned to production in 1 of 3 ways: Plantwide oh rate = ttl budgeted oh costs / ttl budgeted dlh (direct labor hrs) 4,800,000 / 100,000 dlh = /dlh per unit. Consistent with gaap and can be used for external reporting needs. Oh costs may not bear any relationship with direct labor hours. All products may not use oh costs in the same portion. Each department determines an allocation base for its operations. Oh costs / ttl unit # in depart. More refined than the plantwide oh rate method. Assumes that products are similar in volume, complexity, and batch size. Oh costs are proportional to the allocation base. Determine an activity rate for each activity cost pool. Proper id of the factor that drives the cost. Activity rate = ttl cost in activity pool / measure of the activity.

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