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Former Member
Oct 02, 2014 at 08:34 AM

Overhead Actualization in ML and Eleminate Operational inefficiencies

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Hi Expert,

My client is a big group of companies and one of its companies has a issue due to actualization of OH.

That company has few plants and they are doing vertical production from producing raw material to FG within that particular company.

Production in that plants fluctuates drastically and in certain periods plant do not reach to average utilization of capacity. actually capacity is underutilized.

But actual major OH cost such as Depreciation , Wages are most others remain intact. So due to the fact actual activity price is increased(Actual Cost/actual qty which is very much lower than the average). and this will cause unrealistic Valuations of material.

So the requirement from the user is not to roll up this inefficiencies to the Material and which should be able to be recognized as a period Cost.

How this requirement can be fulfilled within and environment ML.

I have seen the accrual method of ML but i do not believe that address above mentioned requirement. (If anyone think that this will help us can i get more information about its behavior in current month and subsequent month etc.)

So experts, looking forward to your valuable support and advice in this regards.

Thanks in advance.

Regards,

Azar