Over costing and under costing occurs because overhead cost is applied first using some ratio to find out the cost of product before the process of production done and actual cost found.
Over costing means charging more costs to items than it's actual cost while under costing means charging less cost then actual costs.
VARIABLE COSTING VERSUS ABSORPTION COSTINGAbsorption costing applies all manufacturing overhead to production costs while they flow through Work-in-Process Inventory, Finished-Goods Inventory and expenses on the income statement while Variable Costing only applies variable manufacturing overhead.Fixed manufacturing overhead is expensed immediately as it is incurred under variable costing while it is inventoried until the accounting period during which the manufactured goods are sold under absorption costing.
Under JOB COSTING all costs relevant to specific jobs are maintained separately to find out the total cost and revenue. Under BATCH COSTING all costs are allocated to production process in batch and there is no separate record for how much any type of material or labor allocated to which units of products normally in mass productions units.
An Activity Based costing always starts with defining your objective. why do you want to implement this system? This definition is very important. Then the scope of the project and then the phases. The typical onjectives of the ABC system would fall under one the following three; 1) Understand Product, customer profitability 2) Understand the process costs and the cost drivers for them 3) Planning resource
Under absorption costing overheads are allocated to production based on predetermined overhead rates like machine hours, or direct labor hours etc while in direct costing overheads are allocated based on activity performed and relationship with production units.
Over costing and under costing of products occurs because it uses a single cost pool for all of the indirect costs. Amounts are estimated because they are determined at the beginning of the accounting period before actual amounts are known.
Over costing means charging more costs to items than it's actual cost while under costing means charging less cost then actual costs.
VARIABLE COSTING VERSUS ABSORPTION COSTINGAbsorption costing applies all manufacturing overhead to production costs while they flow through Work-in-Process Inventory, Finished-Goods Inventory and expenses on the income statement while Variable Costing only applies variable manufacturing overhead.Fixed manufacturing overhead is expensed immediately as it is incurred under variable costing while it is inventoried until the accounting period during which the manufactured goods are sold under absorption costing.
Under JOB COSTING all costs relevant to specific jobs are maintained separately to find out the total cost and revenue. Under BATCH COSTING all costs are allocated to production process in batch and there is no separate record for how much any type of material or labor allocated to which units of products normally in mass productions units.
An Activity Based costing always starts with defining your objective. why do you want to implement this system? This definition is very important. Then the scope of the project and then the phases. The typical onjectives of the ABC system would fall under one the following three; 1) Understand Product, customer profitability 2) Understand the process costs and the cost drivers for them 3) Planning resource
that is so easy
tectonic plates come together under the alpine system mountains.
Under absorption costing overheads are allocated to production based on predetermined overhead rates like machine hours, or direct labor hours etc while in direct costing overheads are allocated based on activity performed and relationship with production units.
the Utah Jazz can sodomize itself
One can use FIFO, LIFO, or Average Costing as acceptable methods for accounting. Standard costing would be an unacceptable answer.
Yes they do occur under volcanoes
Absorption costing does not understand the importance of fixed costs. In absortption costing, fixed costs are absorbed to unit, therefore it is hard to distinguish between variable and fixed costs. And also, the variability of profit will cause confusion, the reason is that the net profit varies with both sales and stock changed under absorption costing. Absorption costing does not understand the importance of fixed costs. In absortption costing, fixed costs are absorbed to unit, therefore it is hard to distinguish between variable and fixed costs. And also, the variability of profit will cause confusion, the reason is that the net profit varies with both sales and stock changed under absorption costing.