IGNOU Assignments Solutions | Ignou Question Paper & Updates

EVERYTHING - IS FREE FOR EVERY STUDENT!!!

logo-ignou-assignments-solutions
background-image-ignou-assignments-solutions

EVERYTHING - IS FREE FOR EVERY STUDENT!!!

What is meant by cost absorption and cost apportionment? Discuss the methods of cost absorption and state which method do you consider to be the best and why?

I

MS 57 Assignment Solution | MAINTENANCE MANAGEMENT | Cost absorption and cost apportionment.

Absorption costing sometimes called “full costing,” is a managerial accounting method for capturing all costs associated with manufacturing a particular product.

The direct and indirect costs, such as direct materials, direct labor, rent, and insurance, are accounted for by using this method.

• Absorption costing is required by generally accepted accounting principles (GAAP) for external reporting.

• Absorption costing differs from variable costing because it allocates fixed overhead costs to each unit of a product produced in the period.

• Absorption costing allocates fixed overhead costs to a product whether or not it was sold in the period.

• This type of costing method means that more cost is included in the ending inventory, which is carried over into the next period as an asset on the balance sheet.

• Because more expenses are included in ending inventory, expenses on the income statement are lower when using absorption costing.

Understanding Absorption Costing : 

Absorption costing includes anything that is a direct cost in producing a good in its cost base. Absorption costing also includes fixed overhead charges as part of the product costs. Some of the costs associated with manufacturing a product include wages for employees physically working on the product, the raw materials used in producing the product, and all of the overhead costs (such as all utility costs) used in production. In contrast to the variable costing method, every expense is allocated to manufactured products, whether or not they are sold by the end of the period.

Absorption Costing vs. Variable Costing :

The differences between absorption costing and variable costing lie in how fixed overhead costs are treated. Absorption costing allocates fixed overhead costs across all units produced for the period. Variable costing, on the other hand, lumps all fixed overhead costs together and reports the expense as one line item separate from the cost of goods sold (COGS) or still available for sale. 

Variable costing does not determine a per-unit cost of fixed overheads, while absorption costing does. Variable costing will yield one lump-sum expense line item for fixed overhead costs when calculating net income on the income statement. Absorption costing will result in two categories of fixed overhead costs: those attributable to the cost of goods sold, and those attributable to inventory.

Wrapped Up

For more Updates join our Telegram Group and also for your inquiry you may comment here or mail us –info@ignouassignmentssolutions.in
Telegram Group – Click Here


Leave a comment
Your email address will not be published. Required fields are marked *

April 2024
M T W T F S S
1234567
891011121314
15161718192021
22232425262728
2930  

Recent Posts

Follow Us!!!

Advertisements

Advertisements - Contact Us for your advertisement.




Sign Up to Our Newsletter!!!

Related More Posts
I
Ignou Assignments
IGNOU BSOG 171 Previous Year Question Paper & Important Question | I.A.S.
April 14, 2022
Save
IGNOU BSOG 171 Previous Year Question Paper & Important Question | I.A.S.
I
Ignou Assignments
Bachelor’s Degree Programme (BSCG) - REAL ANALYSIS Solved Assignment Answer | BMTC 133 | 2021-2022
April 13, 2022
Save
Bachelor’s Degree Programme (BSCG) - REAL ANALYSIS Solved Assignment Answer | BMTC 133 | 2021-2022
I
Ignou Assignments
Bachelor's Degree Programme (BAG) - मानव संसाधनों का प्रबंधन Solved Assignment Answer | BPCS 187 | 2021-2022
May 23, 2022
Save
Bachelor's Degree Programme (BAG) - मानव संसाधनों का प्रबंधन Solved Assignment Answer | BPCS 187 | 2021-2022
I
Ignou Assignments
Write a note on ICT applications in Indian Railways.
April 22, 2022
Save
Write a note on ICT applications in Indian Railways.
I
Ignou Assignments
What is technological inertia? Explain the reasons for technological inertia, preventing the implementation of new technologies?
April 21, 2022
Save
What is technological inertia? Explain the reasons for technological inertia, preventing the implementation of new technologies?
P
Prashuk Jain
IGNOU ECO 02 Previous Year Question Paper & Important Question | Commerce Ignou Question Paper
October 8, 2022
Save
IGNOU ECO 02 Previous Year Question Paper & Important Question | Commerce Ignou Question Paper
I
Ignou Assignments
IGNOU BPAC 132 Previous Year Question Paper & Important Question | I.A.S.
April 15, 2022
Save
IGNOU BPAC 132 Previous Year Question Paper & Important Question | I.A.S.
I
Ignou Assignments
Master's Degree Programme (MCA) - Advanced Database Management Systems Solved Assignment Answer | MCS 043 | 2021-2022
May 21, 2022
Save
Master's Degree Programme (MCA) - Advanced Database Management Systems Solved Assignment Answer | MCS 043 | 2021-2022
I
Ignou Assignments
Bachelor’s Degree Programme (BSCG) - COORDINATION CHEMISTRY, STATES OF MATTER & CHEMICAL KINETICS Solved Assignment Answer | BCHCT 137 | 2021-2022
April 23, 2021
Save
Bachelor’s Degree Programme (BSCG) - COORDINATION CHEMISTRY, STATES OF MATTER & CHEMICAL KINETICS Solved Assignment Answer | BCHCT 137 | 2021-2022
I
Ignou Assignments
Bachelor’s Degree Programme (BSCG) - COMPARATIVE ANATOMY & DEVELOPMENTAL BIOLOGY Solved Assignment Answer | BZYCT 133 | 2021-2022
April 27, 2021
Save
Bachelor’s Degree Programme (BSCG) - COMPARATIVE ANATOMY & DEVELOPMENTAL BIOLOGY Solved Assignment Answer | BZYCT 133 | 2021-2022