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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

QualificationExamRelationshipPeriod
ACCA MA Direct September 2026–June 2027
FIA FMA Direct September 2026–June 2027