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7 Cards in this Set
- Front
- Back
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Direct costs / variable costs |
Dependent on amount of output a business can produce: Overhead Labour Materials |
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Indirect costs / fixed costs |
Costs incurred regardless of how many goods are produced |
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Full costing |
Simplified way in which the business can calculate total cost per unit to ensure all costs are accounted for |
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Overhead allocation rate |
Allocating indirect costs using expected number of units to calculate a cost per unit Add up all indirect costs/expected number of direct labour Then divide by number of machine hours |
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Absorption costing |
Different levels of production, the average total cost of each product will vary |
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Normal level |
Expected level of production achievable within an accounting period |
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Fixed overhead allocation |
Fixed overheads are absorbed into each products total costs =total fixed overhead / normal levels of production |
