What is Direct material? Direct materials refer to the raw materials and components that are directly used in the production of a product or service. These materials are typically a significant part of the product's cost and are typically identi…
What is Period cost? Period costs are expenses that are incurred in a specific accounting period and are not directly tied to the production of goods or services. These costs are typically classified as selling and administrative expenses and are re…
What is Product cost? Product costs are expenses that are incurred to produce goods or services that a company intends to sell. These costs can be classified into two main categories: Direct costs Indirect costs. Direct costs are expenses that can b…
What is the cost object? A cost object is a term used in cost accounting to refer to anything for which the cost is recorded and tracked. This can include products, services, projects, departments, and even individual customers. The main purpose of …
What is the product costing methods? Product costing methods are used to determine the cost of producing goods and services. These methods are important for businesses to understand and implement because they provide a way to accurately track and al…
What is fixed cost? A fixed cost is a type of cost that does not vary with the level of goods or services produced or sold. It is a cost that remains constant regardless of the volume of production or sales. Fixed costs are also known as overhead co…
What is Variable Cost? Variable costs are expenses that change in relation to the level of activity or production within a business. These costs are typically direct costs that can be easily traced to a specific product or service. Examples of varia…
Cost classification is the process of grouping costs according to their nature, function, behavior, controllability, or normality within a business. It helps businesses understand the different types of costs they incur and make more informed decisi…
How a cost can be classified? Cost classification is the process of grouping costs according to their nature or function within a business. It is an important tool for decision-making, as it helps businesses understand the different types of costs t…
What is cost allocation? Cost allocation is the process of assigning costs to different products, services, or activities within a business. It is an important tool for decision-making, as it helps businesses understand the true costs of their produ…
What is cost accounting? Cost accounting is a branch of accounting that focuses on the measurement, analysis, and management of the costs of a business. It is a key tool for decision-making, as it helps businesses understand the costs associated wit…
What is Accounting Cost? Accounting costs are the value for money produced to get benefits or services. The costs that are not fully consumed are reported in the balance sheet and the costs that are consumed are recorded in the statement of compreh…
Accounting Overhead Allocation What is Overhead Allocation? Overhead Allocation is a way of sharing the cost across multiple jobs. We know that there are two types of costs, one is direct and the other is indirect. Direct costs are identical on th…
Absorption Costing What is Absorption Costing? Absorption costing, also known as "full costing" absorbs the total manufacturing overheads with a particular product. According to the GAAP and IFRS absorption costing should be used in financ…
Absorbed Overhead What is Absorbed Overhead? Absorbed Overhead is a manufacturing overhead that has been already applied to the product or other cost object in the production process. These are the indirect costs that are assigned to cost objects. …
Absorption in Accounting What is Absorbtion in Accounting? Absorption is a method or costing where all the costs associated with the manufacture of a particular product are captured. It's a managerial accounting method that includes both fixed a…
Abnormal Spoilage What is Abnormal Spoilage? If the production waste is greater than the normally expected level then that will be called Abnormal Spoilage. There are several reasons that can occur Abnormal Spoilage, among them incorrect operator tr…
