According to acca global.com, "When calculating unit costs under absorption costing principles each cost unit is charged with its direct costs and an appropriate share of the organisation’s total overheads (indirect costs). An appropriate share means an amount that reflects the time and effort that has gone into producing the cost unit.
Service cost centres are those that exist to provide services to other cost centres in the organisation. They do not work directly on producing the final product. Consequently, their costs must be re-apportioned to production cost centres so that their overheads can be absorbed into the final product. This article looks at the various methods of re-apportioning service cost centre costs."
1. Could you give example of service cost center?
2. Are selling, distribution and administration part of service cost center in absorption costing?
Thank you
ACCA Forums
MAAbsorption costing - service cost center
7y ago#1Everything relevant to absorbing overheads and dealing with service centres is explained in detail (with examples) in my free lectures on accounting for overheads.
It is only production service centres that are absorbed into the unit costs.
The lectures are a complete free course for Paper MA and cover everything needed to be able to pass the exam well.
Sir you said it is only production service centers that are absorbed into the the unit costs !!!
On the other wouldn’t the production cost centers be absorbed into the unit costs ?
I also watched your lectures multiple times too .. so please answer me dear john ..
6y ago#3I don't really understand what you are asking.
The object is to find the cost of producing units. If there is a service centre that provides a service to the production (for example the cost of a canteen that is feeding the production workers, or the cost of a repairs department that is repairing the machines used for production) then they are costs of production and a recharged to the relevant production departments.
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