If I have my own business the important thing I have to do is to find out the full costing because it is the total amount sacrificed to achieve a business objective (Peter and Eddie, 2008). And it would help me make decisions on the price to be charge on product, controlling the budget, compare the cost of doing something with its cost that do in different method and estimate the business performance (Dyson, J.R, 2007). The full costing is including fixed cost, variable cost, direct cost and indirect cost.
It would be easier to gather the full cost per unit for the company that produces only one product than the company that produces the multi-product. Because multi-product business will have varied unit of output so we need to accumulating costs and then assigning these costs to particular unit of product on some reasonable basis (Peter and Eddie, 2008).
In many multi-product businesses usually divided into department due to the complex to be managed as a single unit. So each department will have its own area and is managed by the specialist (Peter and Eddie, 2008). Moreover, in each department have the different number of staff, vary output and diverse of costing. As we can see from Mr.D Gree (The director of Financial of a university), he try to prepare two statements of Accounting department and Geography department. And he apportions total indirect costs in proportion to student numbers.
This statement prepare by absorption costing which is a costing system that treat all costs of production as product costs, regardless weather they are variable or fixed (see: http:// www.accou ntingformanagement.com/variable_and_absorption_costing.htm). The cost of a student under absorption costing method consists of direct cost (such as salary for staff and material or offices expense) and both variable and fixed overhead. Absorption costing allocates a portion of fixed overhead cost to each number of students, along with... [continues]
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