Fixed Overhead in Full Costing

Absorption Costing
Knowledge Center


New Topic

Frank Forsberg

Fixed Overhead in Full Costing

What does "fixed overhead is a product cost until the products are sold" mean?

  Michela Arno
Financial Consultant, Netherlands

Fixed Overhead in Full Costing System

Hi Frank, it just means that fixed overhead is capitalized into the product, which means it increases the inventory value, until the inventory is sold.
When the product is sold, fixed overhead is expensed and, as a result, it is credited from the balance sheet and debited as expense in the P&L of the period.

  john paul
Accountant, Kenya

What is Fixed Overhead Cost?

A fixed overhead is defined as a cost that is incurred in the (production) process that neither changes nor varies with the production volume.

Start a new forum topic


More on Absorption Costing:
Special Interest Group

Do you have a keen interest in Absorption Costing? Become our SIG Leader

Absorption Costing
Knowledge Center

About 12manage | Advertising | Link to us / Cite us | Privacy | Suggestions | Terms of Service
2021 12manage - The Executive Fast Track. V15.8 - Last updated: 6-12-2021. All names of their owners.