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In my understanding general principal of ABC is to allocate manufactory overhead and administration costs and deprecation are not manufactory overheads
My question is so why do they part of Facility level cost in ABC?
Regards
SimphiweHi.
The question was intending to refer to administration needed to support the manufacturing process and depreciation already states that this is related to the plant/ machinery.
These are both production overheads – but can not be associated with unit, batch or product line activities – so they are facility (general overheads) and may need to be allocated to the product on an arbitrary basis ( such as machine hours).
Kind Regards
Cath
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