Absorption costing, Cost Accounting

Absorption Costing

The process described in this section by that net overheads are absorbed into production naturally enough is identified as absorption costing.  The absorption of net overheads into product costs has implications for performance measurement, and stock valuation and cost control and students should be aware about the process described is subject to criticism via some accountants and managers.

The criticism arises from the fact such overheads contain items, identified as fixed costs - that do not change when the activity level changes and that would now have to be paid whether there was no activity, as an example of rates - and items, identified as variable costs, that vary more or less directly along with activity, as an example of power consumption. To overcome some of the problems, an alternative way of costing has been developed, identified as marginal costing, that, though by using the process of absorption, eliminates fixed costs from the absorption process.

Posted Date: 2/5/2013 6:50:25 AM | Location : United States







Related Discussions:- Absorption costing, Assignment Help, Ask Question on Absorption costing, Get Answer, Expert's Help, Absorption costing Discussions

Write discussion on Absorption costing
Your posts are moderated
Related Questions
Optimise Manufacturing Cost Of late it is perceived that in order to optimise manufacturing cost, a product might be designed and financed in one country; its material /compon

All  transfer-pricing  methods  give  the  similar division  operating  income.  Do  you  agree? Describe.

Are non-profit and governments required to depreciate assets? Why or why not? Would it make sense for them to use double declining balance? Is there a difference between a non-p

Workmen shoes accumulated the following production and cost data for the past 5 months. i)  Using the high/low method calculate the variable cost per unit and the fixed cos

what are the purposes of cost accounting information


standard hours = 5000 standard wages = Rs.3/hr actual hours worked = 5600 hrs actual wages paid = 17920

REPORT ON SATYAM

Cost accounting as a descriptive or analytical discipline

High - Low Method of Cost Estimation Now, cost estimation is based upon the relationship between past level and past cost of activity. Variable cost is based on the relationsh