Only depreciation for all those fixed assets which directly involve in manufacturing of production volume is part of direct cost while all other depreciation is not part of direct cost and included in indirect cost classification.
Depreciation can be either a direct cost or an indirect cost, or it can be both direct and indirect.Let's illustrate this with the depreciation of a machine used in Department 23 of a manufacturer. The depreciation on that machine is a direct cost for Department 23. It is direct because it is traceable to Department 23 without any allocation.The depreciation of this same machine will be an indirect cost of the products manufactured with that machine. It is indirect because the depreciation is allocated to the products. Perhaps the machine in Department 23 has depreciation of $50,000 per year (cost of machine of $500,000 divided by 10 years of useful life). The $50,000 of annual depreciation is then assigned or allocated to products based on the number of hours that products use the machine. For example, if the manufacture expects 20,000 machine hours of use in the current year, then it assigns or allocates $2.50 ($50,000/20,000) per machine hour to each product using the machine. If Product #189 requires one hour of this machine's time, Product #189 will have $2.50 as part of its indirect costs. Indirect manufacturing costs are also referred to as manufacturing overhead, factory overhead, or burden.
Direct cost are those costs which varies directly with variation in volume of products units like direct labor or direct material while indirect cost has not direct connection with volume of units of products like depreciation building rent supervisors salary etc.
No. Depreciation would be considered an uncontrollable cost because it is fixed
no
Please refer to the following Web site for a complete explanation on how depreciation affects the cost of capital: http://en.wikipedia.org/wiki/Depreciation
Depreciation is an indirect cost as there is no separate identification in product cost that which cost is depreciation as deprecation is a overhead cost that’s why it is indirect cost.
Depreciation can be either a direct cost or an indirect cost, or it can be both direct and indirect.Let's illustrate this with the depreciation of a machine used in Department 23 of a manufacturer. The depreciation on that machine is a direct cost for Department 23. It is direct because it is traceable to Department 23 without any allocation.The depreciation of this same machine will be an indirect cost of the products manufactured with that machine. It is indirect because the depreciation is allocated to the products. Perhaps the machine in Department 23 has depreciation of $50,000 per year (cost of machine of $500,000 divided by 10 years of useful life). The $50,000 of annual depreciation is then assigned or allocated to products based on the number of hours that products use the machine. For example, if the manufacture expects 20,000 machine hours of use in the current year, then it assigns or allocates $2.50 ($50,000/20,000) per machine hour to each product using the machine. If Product #189 requires one hour of this machine's time, Product #189 will have $2.50 as part of its indirect costs. Indirect manufacturing costs are also referred to as manufacturing overhead, factory overhead, or burden.
Direct cost are those costs which varies directly with variation in volume of products units like direct labor or direct material while indirect cost has not direct connection with volume of units of products like depreciation building rent supervisors salary etc.
No. Depreciation would be considered an uncontrollable cost because it is fixed
Depreciation is a period cost and not a product cost as depreciation is still charged even if there is no production or sale of goods.
Depreciation is differ in this sense that depreciation is not a direct expense like other expenses rather it is the allocation of fixed asset cost over useful life of asset to income statement.
no
Cost of depreciation assets and accumulated depreciation is same as accumulated depreciaton calculates how much depreciation is charged till date while remaining is current book value of assets.
Please refer to the following Web site for a complete explanation on how depreciation affects the cost of capital: http://en.wikipedia.org/wiki/Depreciation
yes, depreciation is an implicit cost. but this implicit cost is added to total costs in calculating accounting profits.
Depreciation is called a notional cost because it cannot be measured in real terms.
HIstorical cost based depreciation tends to increase profits when there is inflation