Manufacturing
Unallocated Overhead (Idle Capacity)
Charging fixed overhead to the P&L because production volume was significantly below normal capacity.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Idle Capacity Expense | Expense (+) | 3,000.00 | - |
| Manufacturing Overhead (Control) | Expense (-) | - | 3,000.00 |
💡 Accountant's Note
IAS 2 states that fixed overhead should be allocated to products based on 'normal' capacity. If the factory is half-empty, that 'wasted' rent and insurance cannot be added to the product cost; it must be expensed as a loss.
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