Fixed Overhead in Full Costing Frank Forsberg, Student (MBA), Sweden, Member What does "fixed overhead is a product cost until the products are sold" mean? (...) Read more? Sign up for free
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Fixed Overhead in Full Costing System
Michela Arno, Financial Consultant, Netherlands, Member 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.
What is Fixed Overhead Cost?
john paul, Accountant, Kenya, Member A fixed overhead is defined as a cost that is incurred in the (production) process that neither changes nor varies with the production volume.