ACF2200 Lecture Notes - Lecture 6: Cost Driver, Indirect Costs, Deutsche Luft Hansa
6 Aug 2018
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Acf2200 a closer look at overhead costs. Factory burden costs, or indirect manufacturing costs): all manufacturing costs other than direct material and direct labour costs. Depreciation and insurance of the factory and manufacturing equipment, Ultility cost such as electricity, indirect materials and indirect labour. Non manufacturing costs: all costs incurred outside of manufacturing area (e. g. research/ Other costs than direct costs (indirect costs) of responsibility centres is also described as overhead in service firms. Assigning indirect costs to cost objects: general principles. Cost assignment can take two forms: tracing or allocation. Cost object is an item that is assigned a separate measure of cost: direct costs can be traced directly to products. Indirect costs cannot be traced to cost object; therefore, they need to be allocated. A cost pool is a collection of costs that are to be allocated to cost objects. Cost may be pooled together if they have common allocation base.
