Normal Production Levels Under FAS 151
FAS 151 says judgment needs to be used to determine inventory costs under absorption costing. Could you please tell me how would you determine "normal production levels"? Thanks.
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Benhoumeur, Algeria
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Normal Production Level
Normal production level is a short term concept. For a period, say a year, it can be determined using the average of the two or three years projected levels of sales.
Actual production level over normal production level is a ratio used to allocate fixed costs into unit costs of production.
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Benhoumeur, Algeria
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Variable Costing
If fixed costs are considered periodical cost. That is, they are written off during the accounting p... Sign up
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