What are predetermined overheads absorption rates? PREDETERMINED ABSORPTION RATES Rates that are already been ascertained to: Enable product costs to be calculated when production is completed; Facilitate planning and control since actual costs can only be known after the close of the costing period and Applies where there are seasonal activities and if actual cost … Read more
There are many ways to absorb overheads which are as follows: DIRECT MATERIAL COST PERCENTAGE Suitable in situations where: the material value has some relationship with the overheads; quality and prices of materials do not vary drastically; quantity and cost of materials in each product is almost the same and where processing is uniform Unsuitable … Read more
This article defines what is overhead and the type/classification of overheads Definition Of Overheads: Overheads are costs which do not relate solely to the cost units and must be shared equitably between them. Examples of overheads are indirect material cost, indirect labour and indirect expenses. Types of Overheads Description Production overheads Relates to those indirect … Read more
What is Marginal Costing? It is a costing technique where only variable cost or direct cost will be charged to the cost unit produced. Marginal costing also shows the effect on profit of changes in volume/type of output by differentiating between fixed and variable costs. Salient Points: Marginal costing involves ascertaining marginal costs. Since marginal … Read more
Why do we need to have a bank reconciliation statement? Reason For A Bank Reconciliation Statement Due to the timing of the recording of the receipts and payments in the Cash Book from the recording by the bank, very frequently, a Bank Statement balance may not agree with the balance in the Cash Book. Hence, … Read more