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actual foh is the overhead expenses actually incurred on production while applied foh is budgeted overhead expenses for budgeted production.

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Q: What is the difference between FOH applied and FOH actual?
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What is difference between actual foh and applied foh?

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What isDifferent between applied foh and actual foh?

The applied Foh is the predetermined indirect expense of the material


What advantage does a normal costing system offer?

1.)Income smoothing purpose- Applied FOH rate is an average or normalised rate used in calculation of applied FOH cost.- Use only one surrogate as a FOH cost driver rather than FOH cost are being affected by many one-off and/ or uncontrollable factors2.) More timely factory overhead costs information (Esp. for pricing purpose)- Estimated (applied) FOHs can be made available before actual FOHs are available.3.) Removal of incentive for managers to produce for inventory. If the value of inventories includes FFO (Which is fixed cost), managers can bolster operating profit by producing more units than are sold.-->> Applied overhead cost = variable cost4.) Providing a basis for monitoring evaluating and controlling overhead costs by means of variance analysis.-->> Underapplied FOH = Applied FOH < Actual FOH -->> Unfavourable-->> Overapplied FOH = Applied FOH > Actual FOH -->> Favourable


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Calculation of FOH?

Factory overhead costs (FOH) helps determine the final cost per piece of the goods produced. FOH is calculated by taking the number of finished goods and dividing that number into the total cost to produce.


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