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Cost of Sales Question

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA PM Exams › Cost of Sales Question

  • This topic has 1 reply, 2 voices, and was last updated 8 years ago by John Moffat.
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    Posts
  • September 12, 2017 at 10:25 am #407304
    chiau
    Participant
    • Topics: 20
    • Replies: 35
    • ☆☆

    Dear Tutor,

    In a manufacturing company, where we usually charge depreciation to cost of sales, how do we treat it if for example the factory is closed for 8 months for example and only operates for 4 months.
    Or to go really extreme, what if for example we only produce one unit this year, will we still allocate the depreciation of the whole factory to that unit?

    Or we will use a standard cost and then show depreciation in a separate line?

    Regards

    September 12, 2017 at 1:14 pm #407328
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 54759
    • ☆☆☆☆☆

    There are no rules for how deprecation is charged – neither for Paper F5 (where it is not very likely to be relevant) nor for the financial accounts papers.

    It is normally charged on a time basis (regardless of how many units are produced). If the factory is owned for the whole year then it will normally be charged for the whole year.

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