COMMERCEIETS

ACTIVITY BASED COSTING The Activity-Based Costing (ABC) is a costing system, which focuses on activities performed to produce Products. ABC is that costing in which costs are first traced to activities and then to products. ACCORDING TO CHARTERED INSTITUTE OF MANAGEMENT ACCOUNTANTS, LONDON “Activity Based Costing is cost attribution to cost units on the basis…

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OVER ABSORPTION AND UNDER ABSORPTION OF OVERHEADS Overhead expenses are usually applied to production on the basis of predetermined rates. The predetermined rates may represent estimated, actual or normal costs. If the actual expenses fall short of the amount applied, there is said to be an over-absorption of overheads, and, conversely, if the actual expenses…

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ABSORPTION OF OVERHEADS Absorption of overheads refers to the process of recovering allocated cost to a particular cost centre by the units produced in that cost centre. Absorption of Overheads means the distribution of the overhead expenses allotted to a particular department over the units produced in that department. Overhead absorption is accomplished by overhead…

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Allocation and Apportionment of overheads is also known as departmentalization of overheads. ALLOCATION OF OVERHEADS Allocation is the process of identification of overheads with cost centers. An expense which is directly identifiable with a specific cost centre is allocated to that centre. Thus it is allotment of a whole item of cost to a cost…

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LABOR TURNOVER Labor Turnover of an organization is change in the labor force during a specified period measured against a suitable index. Labor turnover is the ratio of the number of persons leaving in a period to the average number employed. It is the change in the composition of the labor force in an organization….

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COST CENTRE Cost Centre is a department or function within an organization that does not directly add to profit but still costs the organization money to operate. Cost centers only contribute to a company’s profitability indirectly. A cost center can be defined at a smaller level than a department. It could involve a particular job…

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