Absorption of non production overheads in production cost, Cost Accounting

Absorption of Non Production Overheads in Production Cost

Product costs may be compiled for a range of purposes including

a) Stock valuation

b) Product pricing

c) Decision making

For stock valuation purposes International Accounting Standard No. (2) two define cost being such expenditure that has been incurred in the normal course of business in bringing the product or service to its recent situation and location. This expenditure must involve in addition to the cost of purchase those costs of conversion as are suitable to that location and situation. Costs of conversion involve production overheads and other overheads attributable in the specific circumstances of the business in bringing the product or service to its recent location and situation

For product pricing reasons, administration, distribution and selling overheads may be absorbed in a number of ways involving

a) Like a percentage of selling price

b) Like a percentage of full cost of production

c) Like a percentage of conversion costs

d) Like a rate per unit sold

For decision making reasons it is relevant also to identify that part of administration distribution and selling overhead costs are directly attributable to a particular product and that are avoidable if such product is discontinued.

Posted Date: 2/5/2013 7:41:11 AM | Location : United States







Related Discussions:- Absorption of non production overheads in production cost, Assignment Help, Ask Question on Absorption of non production overheads in production cost, Get Answer, Expert's Help, Absorption of non production overheads in production cost Discussions

Write discussion on Absorption of non production overheads in production cost
Your posts are moderated
Related Questions

Assumptions of CVP This chapter has given information on how to apply CVP for the business analysis. Most of this analysis is keyed to the model of how profitability is impacte

Assume that a primary care physician practice performs only physical examinations.  However, there are three levels of examinations I, II, III - that vary in depth and complexity.

Herrestad Company does produce and sell two products and the details below will be used to prepare a segmented income statement (showing the income for each product and the total)

You are a beginner accountant with a large accountancy firm and a training day has been organised to update all technical staff on a range of topics across numerous technical disci

Value one stock using the dividend discount model of stock valuation with two periods of constant growth (not the simple one period growth model).  See chapter 18 of the textbook

While we are looking for sources funds it is other than natural to start searching from home. What do we have? During examining the requirement for working capital we could also ma

what are the advantages and disadvantages of marginal costs plus a fixed lump-sum fee?

Question Hornsby Manufacturing has four categories of overheads. The four categories and the expected overhead costs for each category for next year are as follows:

MX obtains 80% of the 1 million issued $1 ordinary share capital of FZ on 1 May 2009 for $1,750,000 when FZ's reserved earnings were $920,000. The carrying worth was considered