Definition – Direct Cost The cost which is directly attributable/traceable/chargeable to a specific product or service is called direct cost.…
Overheads absorption rate (OAR) is a pre-determined rate used for absorbing the production overheads into the cost of a product.…
The cost that is allocated and apportioned to service cost centers is reapportioned to production cost centers on a suitable…
Allocation is the charging of overheads directly to one cost center. Whereas spreading common overheads over different cost centers on…
The Break-even point is the point where the business breaks even i.e., it experiences no profit no loss. At this…
CVP analysis looks at the relation between cost, profit, and volume. This method can be utilized to decide the optimal…
Equivalent units are notional complete units that represent incomplete units (work in progress inventory). For e.g., If 10 units are…
If you recall, the concept of process costing is that the production is continuous. The input (material, labour, and overheads)…
Definition Batch costing is a form of specific order costing in which the costs of separately identifiable units are determined.…
Businesses use different costing methods to value their products. In this article, we are going to highlight the similarities and…