Overhead+Apsorption

What is under/over OH absorption?

http://www.yourarticlelibrary.com/cost-accounting/overheads-cost-accounting/manufacturing-overhead-accounting-and-control-with-journal-entries/55665/

** Manufacturing Overhead: Accounting and Control (With Journal Entries)! **

Accounting of Manufacturing Overhead:
A control account under the name of Manufacturing Overhead Control Account is opened in the Cost Ledger. ** This account is debited by indirect material, indirect labour and indirect expenses incurred by passing the following journal entry: ** Manufacturing Overhead Control A/c…. Dr.

Dr. Overhead Control A/c $110 Cr. AP $110

** The recovery of such overheads is made by passing the following entry: **

Work-in-Progress Control A/c…. Dr.

 To Manufacturing Overhead Control A/c Assume the OH is __under__ absorbed Dr. WIP $100 Cr. Overhead Control A/c $100

Adjustment: Dr. Income (Sales to WIP) $10 Cr.Overhead Control A/c $10

Under-absorbed overhead means that the overhead charged to production was too low and so there must be a debit to the income statement.

In a typical cost ledger, the double entry for indirect labour cost incurred is:

DR Overhead control CR Wages control Indirect wages are 'collected' in the overhead control account, for subsequent absorption into work in progress.

@Over Head absorption method