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Allocated overheads

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA FM Exams › Allocated overheads

  • This topic has 1 reply, 2 voices, and was last updated 1 year ago by John Moffat.
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  • May 24, 2021 at 2:45 pm #621629
    vavneetb
    Participant
    • Topics: 171
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    • ☆☆☆

    We don’t take allocated overheads in cash flow while calculating NPV?

    May 24, 2021 at 3:10 pm #621635
    John Moffat
    Keymaster
    • Topics: 56
    • Replies: 51582
    • ☆☆☆☆☆

    Fixed overheads are only relevant if the total overheads of the company increase as a result of doing a new project.

    Allocating/sharing overheads differently between projects does not mean the total overheads have changed.

    I do explain this in my free lectures on investment appraisal.

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