Fixed Overhead in Full Costing

Absorption Costing
Knowledge Center

Forum

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
Summary
Forum
Fixed Overhead in Full Costing
Normal Production Levels Under FAS 151
Marketing Overheads in Absorption costing?
Difference Absorption Costing versus Full Costing?
Absorption Cost Frequency
🔥Assessing Cost Absorption of Underperforming Business Units
Best Practices
Absorption of Fixed Costs
Absorption Costing Converts Fixed Production Overheads into Product Cost
Special Interest Group

Are you interested in Absorption Costing? Sign up for free

Notify your students

Copy this into your study materials:

and add a hyperlink to:

Link to this discussion

Copy this HTML code to your web site:

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: 22-4-2021. All names of their owners.