Overhead Actualization

Question

Dear Members,
If the overheads are applied to an order based on the activities performed and from the overheads secondary cost elements of costing sheet, and those are later not actualized from the expense posted in FI module, will it double charge the expenses in GL And on product Cost?

Answer 1

I think my question is not being understood, Let me put some numbers which might help us understanding the situation.
I have a product whose standard cost is set to say $100 ($90 Material, $5 Labor & $5 Overheads) and price is set to be $120, there is no opening & closing inventory and the goods will be sold in the same month and only one unit is produced during the month
When the actual materials consumed at was $92 and while making the confirmations & finalizing the goods movement lets assume the standard cost of overheads & labor was charged ($5 each) and now the order contains a debit of $102
When settling this order without running allocation cycle,  splitting/revaluation of prices etc, The cost debit to FG account will be the standard cost i.e $100 while the difference i.e $2 will be settled in the variance account (Only material variance)
My question is when this FG is later transferred to COGS it will be again $100 and remember since to revaluation of overhead prices is done the standard overheads & labor cost is included in this $100 while the variance of $2 will be shown again.
Now lets suppose in isolation the FI is charged with $12 of cost in terms of labor and overhead accounts, who, since are not allocated & written on the orders, are isolated and will be appearing in the expenses section instead of only incremental part of theirs i.e ($12-$10=$2) should be shown as unabsorbed costs
Will the P&L in this scenario depict a picture of
Particulars                        $
Renevue                         120
COGS (STD)                 (100) (90+5+5)
Variance                          (2)
GP                                   18
Expenses                         12
Net Profit                             6
Instead of
Particulars                        $
Renevue                         120
COGS (STD)                 (100) (90+5+5)
Variance                          (4)
GP                                   16
Expenses                         0
Net Profit                             16