Accounting Question

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Accounting Question

Accounting Questions

Question 3

The use of absorption costing has traditionally involved the collection of costs on a departmentalised basis and a system of “Cost Cascades” by which the total costs of support departments are accumulated and recharged to production departments as overheads. These overheads, along with the overheads associated with the production departments themselves, are then spread across products using relatively broad volume-related measures, of which labour hours and machine hours are traditionally the most common. It has been argued in recent years that these traditional methods of imputing overhead costs to products are no longer appropriate to modern manufacturing, ...
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