COSTING METHODS

Costing Methods



Costing Methods

Advantages of switching to machine hours as an overhead recovery base

This method is most common in cases where the equipment is a major factor of production. Development of mechanization and automation leads to the fact that the computer time is often the best sign for the allocation overhead than direct man-hours. In many cases, a significant portion of production overheads consists of depreciation of equipment, maintenance costs and operating and energy costs.

These costs along with additional pay and transportation and procurement costs have a close relationship with machines than with the use of direct labor. However, ...