Cost apportionment is the method of charging a proportion of a cost to a cost centre or cost unit because these cost centres or units share in incurring those costs without directly incurring them. A basis of apportionment is always required.
A cost included in a budget representing the expected expenses to be incurred by a budget center, cost center, cost unit, product, process, or job.
A cost unit represents a unit of production for which costs are aggregated. It can vary from a single item like a chair or light bulb to a sub-assembly in more complex products like an aircraft wing or gearbox. In cases where individual unit costs are minimal, cost units might be expressed as batches.
A direct hour is the time spent working directly on a product, service, or cost unit within an organization. It is measured in direct labor hours, machine hours, or standard hours.
An hour spent working on a product, service, or cost unit produced by an organization by those operators whose time can be directly traced to the production. Direct labour hours are sometimes used as a basis for absorbing manufacturing overheads to the cost unit in absorption costing.
Direct materials cost is the expenditure on materials that are used directly in the production process to manufacture a product. This cost is a part of various costing methods and significantly influences the overall production cost.
Indirect costs, also known as indirect expenses, are expenses that cannot be traced directly to a product or cost unit and are therefore considered overheads.
Process costing is a method of cost accounting used where production is continuous, and the cost per unit is derived by spreading production costs equally across all units produced in a specific time period.
An item, sub-assembly, part, or cost unit manufactured or sold by an organization.
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.
Raw materials are the basic materials that are used at the very beginning of a production process, essential for manufacturing final products.
