Absorption costing, Cost Accounting

Assignment Help:

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.


Related Discussions:- Absorption costing

debt service fund and special revenue fund, For your assignment, discuss w...

For your assignment, discuss when the government and nonprofit organizations would use each of the following funds: Capital projects fund Debt service fund Special r

Cash flow budget, the total (ie. aggregated) cashflows in respect to operat...

the total (ie. aggregated) cashflows in respect to operations, with details of annual cash inflows & annual outflows in respect to operations, the total (ie. aggregated) cashflo

Prepare the capital accounts, Shirley and Ken are in partnership, trading i...

Shirley and Ken are in partnership, trading in the construction industry. The year end for the partnership business is 30 June. You are the Assistant Accountant and have been as

Accounting, What are the basic characteristics of a relevant cost? Why are ...

What are the basic characteristics of a relevant cost? Why are future costs not always relevant? Are all relevant costs found in accounting records?

Occurrence of overhead variances, Occurrence of Overhead Variances Ove...

Occurrence of Overhead Variances Overhead variances arise mainly because of the conventions of the overheads absorption process. The overhead absorption rates employed in this

Internal users of accounting information, Describe the ways in which the ne...

Describe the ways in which the needs of internal and external users of accounting information are the same and different.

Amortization of bond premium for the year, on the first day of the current ...

on the first day of the current fiscal year $2,000,000 of 10 year 7% bonds with interest payable annually, were sold for $2,125,000. Present enteries to record the following transa

Why is it important for financial statements, Why is it important for finan...

Why is it important for financial statements and other external reports to be based on generally accepted accounting principles?

Cost sheet, what is a cost sheet? what are its advantages?

what is a cost sheet? what are its advantages?

Limitations of cvp analysis, Limitations of CVP Analysis The make use ...

Limitations of CVP Analysis The make use of the basic CVP model is just only relevant to planning and decision-making in an activity range whether the basic cost and revenue b

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd