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Cost Accounting Essentials: Labour Turnover & Overheads

The document covers key concepts in cost accounting, including the calculation of labour turnover and the reconciliation of cost and financial accounts. It highlights essential documents used in costing and explains the absorption of overheads using predetermined rates. The information is structured to provide quick reference notes for understanding these accounting principles.

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lumber jack
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13 views1 page

Cost Accounting Essentials: Labour Turnover & Overheads

The document covers key concepts in cost accounting, including the calculation of labour turnover and the reconciliation of cost and financial accounts. It highlights essential documents used in costing and explains the absorption of overheads using predetermined rates. The information is structured to provide quick reference notes for understanding these accounting principles.

Uploaded by

lumber jack
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

Cost Accounting Quick Notes - Part 4

26. Labour Turnover

- Measures employee replacement

Formula:

Labour Turnover Rate = (No. of employees left/replaced / Average no. of employees) × 100

27. Reconciliation of Cost and Financial Accounts

Since cost and financial profit can differ, prepare a reconciliation statement showing:

- Under/over absorption of OH

- Stock valuation differences

- Non-cost items (e.g. interest income, donations)

28. Essential Documents in Costing

- Material Requisition Note

- Job Cost Sheet

- Time Sheet

- Overhead Absorption Report

- Cost Sheet

29. Absorption of Overheads

Used to distribute overheads to products using a predetermined rate:

- Based on machine hours, labor hours, or % of prime cost

Example:

Overhead Rate = Estimated OH / Estimated base (e.g., hours or cost)

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