Cost of product

Dear Experts ,

I want to undersand allocation methodlogy  management fees, and sales fees to the cost of product.

For example  particular month 500 number production , (Material, labour, other Overhead) i alllocated based on production volume (labour mix ratio). My concern is management fee and sales how can i allocation  based on past history based now allocated to product

Is this system is correct or some other any metod?  becase managemen fee and sales fee is period cost  so i used this method pls explaind

 

Replies (1)

 

  • Management & selling costs are period costs, not product costs

  • Do not include them in inventory valuation (financial reporting)

  • You can allocate them for internal MIS, but use logical drivers

  • Avoid using only past %—prefer Activity-Based Costing

  • Best practice: maintain separate financial and managerial costing views

 

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