Overhead control account
An overhead control account records actual overhead incurred and overhead absorbed into output. In a simple system, actual costs are debited and absorbed overhead credited. A remaining debit is under-absorption; a remaining credit is over-absorption, before the required closing treatment. Reconcile the account to supporting costs and activity so posting errors are distinguished from genuine expenditure or volume differences.
Worked example
Actual overhead debit is $52,000 and absorbed overhead credit $45,000, leaving $7,000 debit under-absorption. A transfer to expense clears it on the stated simple period treatment.
Common mistake
Do not reverse the debit/credit meaning or treat all under-absorption as an expenditure variance.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | MA | Direct | September 2026–June 2027 |
| FIA | FMA | Direct | September 2026–June 2027 |
