where commercial tonne km is used . absolute tonne km is more accurate than commercial tonne km. then why commercial tonne km is used
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Quick Summary
This discussion delves into the inaccuracies of commercial tonne kilometre (TKM) costing compared to the absolute TKM method. The absolute method, calculated as distance multiplied by actual weight, is presented as the most accurate way to determine incurred costs. In contrast, the commercial method, using average weight, is deemed flawed and potentially used for tax evasion due to its cost-reducing allocation. The conversation highlights the importance of using the correct formula for precise cost accounting.
Ok Mr. Sasi, that is the right way you got. Weighted average reduces and simple average value but accurate. That weighted average method is used in inventory and capitalising borrowing costs.
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