Make or buy, sell or process further, keep or drop, accept or reject a special order, and repair or replace are all examples of decisions which can made using the incremental analysis approach. The technique considers only relevant costs when a business needs to make a choice between alternative options.
Incremental Analysis Approach October 2nd, 2017Team
Immaterial waste products arising from a production process are known as byproducts or by-products. The products are usually accounted for in a non-GAAP manner using either the production method or the sales method. The production method recognizes the value of the byproduct when it is produced, and the sales method recognizes the value when the byproduct is sold.
Cost apportionment is the process of distributing general overheads to cost centers or departments. An appropriate base quantity such as floor area or kilowatt hours is used to calculate the apportioned overhead.
Cost Apportionment of General Overhead November 6th, 2016Team
A business needs to separate period and product cost as product costs are included as part of the inventory until the product is sold, whereas period costs are treated as an expense in the income statement in the period in which they are incurred.