Syllabus Overview

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View Syllabus Outline (7 topics)

Direct Expenses and Overheads

1. Direct vs. Indirect Expenses

  • Direct Expenses: Expenses directly attributable to a specific cost center or product (e.g., cost of hiring special molds for a job).
  • Indirect Expenses (Overheads): General business expenses that cannot be directly traced to a single unit (e.g., factory lighting, office stationary).

2. Apportionment and Allocation of Overheads

  • Allocation: Directly charging whole items of cost to specific cost centers (e.g., charging direct materials directly to the production floor).
  • Apportionment: Distributing common overhead costs across multiple departments using an equitable basis (e.g., distributing factory rent based on the floor area occupied by each department).

3. ABC Costing (Activity-Based Costing)

An alternative to traditional overhead absorption. Overhead costs are assigned to activities (cost pools), and then charged to products based on their actual consumption of those activities (using cost drivers).