By Emile Woolf International
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Extra info for ACCA F2 Management Accounting: F2 (Acca Key Study Text)
They are indirect production costs (production overheads). In a manufacturing company, all costs of administration are usually treated as indirect costs (administration overheads) and all or most sales and distribution costs are also usually treated as sales and distribution overheads. Indirect material costs Indirect materials are any materials that are used or consumed that cannot be attributed in full to the item being costed. Indirect materials are treated as an overhead cost, and may be classified as production overheads, administration overheads or sales and distribution overheads.
80. We can also calculate the cost per machine hour, which is $60 (= $36,000/(4 × 150)). Both units of Product X and machine hours worked can therefore be costed as cost units: one is a unit of output and the other is a unit of activity. Cost centres: direct and indirect costs Direct costs of a cost centre are costs that are attributable directly to the activity of the cost centre. Direct costs of a cost centre might be indirect costs of the units produced by the cost centre. Example The wages of a maintenance and repairs engineer might be a direct cost of the department in which he works.
Non-production costs are any items of cost that are not manufacturing costs. 4 Elements of non-production costs Non-production costs might be divided into: Administration costs Sales and distribution costs (also called marketing costs) Finance costs Administration costs Administration costs are the costs of providing administration services for the entity. They might be called ‘head office costs’ and usually include the costs of the human relations department and accounting department. com for Q/As, Notes & Study Guides 27 Paper F2: Management Accounting the salary costs of all the staff working in the administration departments the costs of the office space used by these departments, such as office rental costs other administration expenses, such as the costs of heating and lighting for the administration offices, the depreciation costs of equipment used by the administration departments, fees paid to the company’s solicitors for legal services, costs of office stationery and so on.
ACCA F2 Management Accounting: F2 (Acca Key Study Text) by Emile Woolf International