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Non production cost

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA MA – FIA FMA › Non production cost

  • This topic has 1 reply, 2 voices, and was last updated 6 years ago by John Moffat.
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  • April 18, 2016 at 3:46 pm #311364
    maan87
    Member
    • Topics: 119
    • Replies: 155
    • ☆☆☆

    Sir why Research and devolopemnt cost is treated as non production cost..? If reserch is to manufacture a product then why it is not production cost?

    April 19, 2016 at 7:46 am #311594
    John Moffat
    Keymaster
    • Topics: 57
    • Replies: 51551
    • ☆☆☆☆☆

    The answer partly depends on the context of a particular question.

    However in general the production cost is the cost of actually making the product. There are lots of other costs that are likely to occur (such as R&D and selling and delivery costs etc), but the cost of actually making each unit is the material, labour, and variable overheads in the factory on that one unit.

    R&D may well have been necessary but they will only occur once – production may go on for many years.

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