Absorption costing is a methodology used to allocate all manufacturing costs to the production units. It is generally used in traditional costing systems.
Cost accumulation is the systematic process of gathering costs associated with production activities, allowing businesses to determine the total cost required to manufacture products in an organized manner.
Factory overhead, also known as indirect manufacturing costs or factory burden, includes the expenses associated with manufacturing that cannot be directly traced to a specific product. Examples include factory rent, maintenance wages, and general machinery depreciation.
Wages and related costs of factory employees, such as inspectors and maintenance crews, whose time is not charged to specific finished products; sometimes combined with indirect materials costs, such as supplies, to derive indirect costs.
Indirect materials cost refers to the expenses incurred in providing materials that are not directly traceable to a specific product or job but are necessary for the manufacturing process.
Maintenance expense refers to the costs incurred in performing the maintenance function, classified under different overheads depending on the department or use.
A manufacturing account, or manufacturing statement, is an accounting statement forming part of the internal final accounts of a manufacturing organization; for a particular period, it is constructed to show direct cost of sales, manufacturing overhead, total production cost, and cost of goods manufactured. In some cases, a manufacturing profit is also computed.
The manufacturing cost of finished goods refers to the total expense incurred to produce a finished product. This includes the direct materials, direct labor, and manufacturing overhead costs associated with the production process.
Understand in detail the various expenses incurred during the manufacturing process, including direct materials, direct labor, direct expenses, and manufacturing overhead.
Manufacturing Overhead, also known as Production Overhead, includes all the indirect costs incurred in the production process that cannot be directly traced to the product or cost unit. These costs cover a wide range of expenses such as depreciation of machinery, factory rent, maintenance expenses, and utilities.
Materials cost is the expenditure incurred by an organization on direct or indirect materials. The expenditure on direct materials is part of the direct cost of sales, whereas the expenditure on indirect materials is categorized as manufacturing overhead.
An overhead absorption rate (OAR) is a method used in cost accounting to allocate overhead costs to products or services based on a predefined absorption basis.
An Overhead Analysis Sheet, also known as an Overhead Distribution Summary, is used to allocate manufacturing overhead costs to various cost centers within an organization using appropriate allocation or apportionment techniques.
A basis used in absorption costing for absorbing the manufacturing overhead into the cost units produced. The formula used is: Overhead Absorption Rate = (Total Overhead / Total Direct Material Cost) * 100.
A basis used in absorption costing for allocating manufacturing overhead to the cost units produced. This method involves applying a percentage of the prime cost to determine the overhead allocation.
The total of all the costs incurred in producing a product or cost unit. In a manufacturing account, the production cost is represented by the total of the direct cost of sales and the manufacturing overhead.
Production overhead, also known as manufacturing overhead, refers to the indirect costs associated with manufacturing a product. These costs are not directly tied to the production process but are necessary expenses for running a manufacturing operation.
A basis used in absorption costing for absorbing manufacturing overhead into the cost units produced. It is essential for allocating overhead costs accurately in a manufacturing environment.
Rate per machine hour is a basis used in absorption costing for absorbing manufacturing overhead into cost units produced, providing insights into the operational efficiency and cost management within a manufacturing setup.
A basis used in absorption costing for absorbing manufacturing overhead into the cost units produced.
