Understanding OH Cost Flow Part 4
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Generated by Jive on 2014-07-30+02:00 1 Basics of Standard Costing - Understanding overhead cost flow-Part 4 This is in continuous of my other document of understanding Standard Costing and its flows. Basics of Standard Costing - Understanding the Cost Component Structure-Part 3 Overhead costs are costs which can only indirectly be attributed to the product, such as electricity or general storage costs. We can allocate these overhead costs in various ways: Here I have discussed about overhead calculation through costing sheet. This is a beginner's guide to understand the costing Sheet. Overhead application In the conventional method, overhead is appli ed to the reference object as a percentage rate or a quantity- based rate. The overhead is applied by means of costing sheets. The very purpose of using a cost sheet is that we want to apply indi rect costs to the final cost of the product or process. Costs that cannot be assigned to the product cost collector directly can be all ocated by determining the overhead expenses and applying them to the cost collector. Overhead costing is the means by which we allocate indirect costs to the appropriate objects. The costing sheet links all the functions of overhead calculation. The direct costs to which overhead is applied (calculation base),The conditions under which overhead is applied (dependency),Whether overhead is allocated on a percentage basis or on a quantity basis, The amount of the overhead percentage, or the amount of overhead for each unit of measure (overhead), The validity period for the overhead, Which object (cost center, process, or order) is credited, and under which cost element in the case of actual postings (credit key) Define Costing Sheet- T CODE KZS2
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