Page 27 - 5.1 (b) i. Finac1 ITC Summarised Notes
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ITC EXAM PREP
Measurement
Production overheads
• Variable overheads
• vary according to production
• Allocated to cost of inventory based on actual production
• Fixed overheads
• do not vary according to production levels
• Allocated to cost of inventory based on “normal capacity”
• Unless actual production greater than normal capacity
• Then allocated based on actual production
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