Absorption costing, also known as full costing, encompasses an accounting process where all manufacturing costs, both fixed and variable, are absorbed by the product. This method assigns a portion of fixed overhead costs to each unit produced, resulting in a more comprehensive understanding of product costs.
Cost accumulation is the systematic process of gathering costs associated with production activities, allowing businesses to determine the total cost required to manufacture products in an organized manner.
Cost classification is the process of grouping expenditures according to common characteristics, facilitating the proper allocation and management of expenses within an organization.
Cost control accounts, also known as cost ledger control accounts, are essential for capturing and managing all costs associated with a company's production processes.
The Direct Production Cost of Sales refers to the expenses directly attributable to the manufacturing of goods sold by a company. This includes the costs of raw materials, labor, and other expenses directly involved in production.
Full absorption costing, also known as absorption costing, is a method of accounting that captures all direct and indirect manufacturing expenses when determining the cost of the final product.
Full costing, also known as absorption costing, is an accounting method where all fixed and variable manufacturing costs are considered to be product costs.
The term 'homogeneous' refers to something having the same composition or form, often used in the context of organizations that produce or sell products with great similarities. This can lead to reduced organizational development and manufacturing costs.
Indirect overhead refers specifically to overhead costs that cannot be directly attributed to the production of a specific product but are necessary for the overall operation of the business.
Internal Failure Costs are expenses associated with defects that are detected before a product or service is delivered to the customer. They are part of the broader category known as the Cost of Quality.
Job costing, also known as job order costing or specific order costing, is a costing methodology used to accurately assess the costs associated with individual jobs within an organization—essential for businesses that produce a diverse range of products or services.
Kaizen Costing is a technique for reducing and managing costs during the manufacturing process. It involves making continuous improvements to processes through small incremental changes, with the active contribution of all employees.
Labour hour rate refers to the cost of one hour of labour, which includes direct and indirect costs tied to the labour force.
Understand in detail the various expenses incurred during the manufacturing process, including direct materials, direct labor, direct expenses, and manufacturing overhead.
A predetermined overhead rate is an estimated rate used to allocate overhead costs to products or job orders before actual costs are known. This rate is usually computed in advance of operations and often covers a fiscal year.
A costing system applied to production carried out by a series of chemical or operational stages or processes. Characterized by the accumulation of costs for the whole production process and computation of average unit costs at each stage.
In standard costing, the standard direct labour cost is derived from the standard time allowed for the performance of an operation and the standard direct labor rate for the operators specified for that operation.
A predetermined rate of pay for direct labour operators used for establishing standard direct labour costs in a standard costing system, providing a basis for comparison with actual direct labour rates paid.
In standard costing, the standard cost derived from the standard quantity of materials allowed for the production of a product and the standard direct materials price for the materials specified for that product.
In standard costing, a predetermined price for direct materials used for establishing standard direct materials costs in order to provide a basis for comparison with the actual direct material prices paid.
Total Absorption Costing allocates all manufacturing costs to products, ensuring all costs related to production are accounted for in the valuation of inventory and cost of goods sold.
