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Accrual Calculation vs. Overhead Calculation w Costing Sheet
Question: I have a couple of questions concerning the differences between Accrual Calculations in CO and Overhead Calculations using costing sheets.
There are obvious similarities and differences, such as they both use an overhead structure which includes Calculation Base, OH rates and Credit key. The Accrual calculation uses accrual cost elements which are primary cost elements while Overhead Calculation uses a secondary cost element.
My main question is this: apparently they work in a similar fashion. Under what situations would you use Accrual Calculation vs Overhead Calculation? I do know that the accrual calculation will affect FI whereas OH calculation will only affect CO. However, I am having a hard time grasping under which situation one is used vs the other.
My secondary question is related to Accrual Calculation Methods; Percentage Method and Target = Actual Method. I understand the Percentage Method, but has anybody ever used the Target = Actual Method? If so can you give an example?
Any help you can provide is greatly appreciated.
There are obvious similarities and differences, such as they both use an overhead structure which includes Calculation Base, OH rates and Credit key. The Accrual calculation uses accrual cost elements which are primary cost elements while Overhead Calculation uses a secondary cost element.
My main question is this: apparently they work in a similar fashion. Under what situations would you use Accrual Calculation vs Overhead Calculation? I do know that the accrual calculation will affect FI whereas OH calculation will only affect CO. However, I am having a hard time grasping under which situation one is used vs the other.
My secondary question is related to Accrual Calculation Methods; Percentage Method and Target = Actual Method. I understand the Percentage Method, but has anybody ever used the Target = Actual Method? If so can you give an example?
Any help you can provide is greatly appreciated.
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