Tag Archives | Overheads

Absorption of Overheads: Meaning and Methods | Accounting

In this article we will discuss about the meaning and methods of overhead absorption. Meaning of Overhead Absorption: CIMA defines Absorption of Overheads as “the process of absorb, overhead costs allocated or apportioned over a particular cost centre or production department by the units produced”. Absorption of overheads refers to charging of overheads to individual […]

Overheads: Definition and Collection | Labour

In this article we will discuss about:- 1. Definition of Overheads 2. Meaning of Chargeable Expenses 3. Steps in Accounting of Overheads 4. Classification and Codification of Overheads 5. Collection of Overheads 6. Cost Allocation 7. Allocation and Apportionment of Overheads. Definition of Overheads: CIMA defines Overhead Cost as “the total cost of indirect materials, […]

Depreciation: Meaning, Reasons and Rate | Cost Accounting

In this article we will discuss about Depreciation of Assets:- 1. Meaning of Depreciation 2. Factors for Rate of Depreciation of Plant and Machinery 3. Reasons 4. Rates 5. Life Expired Assets 6. Replacement Value of Assets. Contents: Meaning of Depreciation Factors for Rate of Depreciation of Plant and Machinery Reasons for Charging Depreciation Rates […]

Depreciation: Meaning, Reasons and Rate | Cost Accounting

In this article we will discuss about Depreciation of Assets:- 1. Meaning of Depreciation 2. Factors for Rate of Depreciation of Plant and Machinery 3. Reasons 4. Rates 5. Life Expired Assets 6. Replacement Value of Assets. Contents: Meaning of Depreciation Factors for Rate of Depreciation of Plant and Machinery Reasons for Charging Depreciation Rates […]

Replacement Cost Basis of Depreciation | Cost Accounting

In this article we will discuss about the arguments for and against replacement cost basis of depreciation. Arguments for Replacement Cost Basis: Accountants who favour charging of depreciation on replacement cost basis give the following arguments: 1. In order to maintain the capital assets properly, it is desirable that depreciation should be charged on replacement […]

Top 6 Methods for Providing Depreciation | Cost Accounting

The following points highlight the top six methods of providing depreciation. The methods are: 1. Depreciation Based on Time Factor 2. Depreciation Based on Usage 3. Depreciation Based on Both Usage and Time Factors Joint Rate Method 4. Depreciation Based on Maintenance Factor 5. Considering the Revenue Earning Factor of the Asset 6. Revaluation Method. […]

Plant and Machinery Register (With Illustration) | Depreciation

In this article we will discuss about the plant and machinery register. Concerns having a large number of machines usually maintain a Plant and Machinery Register. The maintenance of such a register facilitates the calculation of annual charge of depreciation in respect of each machine. Each machine and plant is allocated a separate folio wherein […]

6 Main Types of Plant Capacity Level | Cost Accounting

The following points highlight the six main types of a plant capacity levels. The types are: 1. Maximum Capacity 2. Practical Operating Capacity 3. Capacity to Make and Sell 4. Actual Capacity 5. Normal Capacity 6. Idle Capacity. Plant Capacity Level: Type # 1. Maximum Capacity: This is the cent per cent rated capacity of […]

Capacity of a Factory | Cost Accounting

The ability of a factory to produce with the present resources and facilities which it commands is called the capacity of a factory. A factory may have a number of machines and in order to run the machines it may require proper equipment’s, buildings, material, labour force, working capital and all other facilities. If the […]

Inclusion of Overheads in Valuation of Stock | Cost Accounting

In this article we will discuss about the arguments for and against inclusion of overheads in valuation of stock. Arguments for Inclusion: 1. Fixed overheads should form a part, of the cost of production as these are incurred during a period in order to manufacture products of that period. 2. Where the fixed costs are […]

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