Repairs & Maintenance classification

2433 views 13 replies

Hi

R&M is classified as indirect cost. Sometimes it's mentioned as Semi variable or variable cost (which means a direct cost). Even I think all factory repairs and maintenance can be shown as direct cost because

the economic benefit is usual, that is, sales will continue

Even if a new spare like air compressor is replaced during Repairs & Maintenance, that spare is capitalised.

When welding works happen, it is an expense etc.

Why is Repairs and Maintenance given an indirect cost classification when it has broader perspective when all the above example impact per unit cost? 

 

 

Replies (13)
Cost centre allocation needs to be given. On which cost centre it has got to be absorbed.

What has cost center has to do with it when it's absorbtion costing and not ABC. In tally cost centre is department. Ok got it. We have to assign a cost center for Repairs and Maintenance ledger and I forgot since I'm not in my office now. So how can a cost center help when we don't classify cost center under direct or indirect group? Besides there are no predefined cost centers like groups for ledgers have. 

What has cost center has to do with it when it's absorbtion costing and not ABC. In tally cost centre is department. Ok got it. We have to assign a cost center for Repairs and Maintenance ledger and I forgot since I'm not in my office now. So how can a cost center help when we don't classify cost center under direct or indirect group? Besides there are no predefined cost centers like groups for ledgers have. 

What has cost center has to do with it when it's absorbtion costing and not ABC. In tally cost centre is department. Ok got it. We have to assign a cost center for Repairs and Maintenance ledger and I forgot since I'm not in my office now. So how can a cost center help when we don't classify cost center under direct or indirect group? Besides there are no predefined cost centers like groups for ledgers have. 

I simply meant to say, cost centers can't be defined under direct or indirect groups 

Bro,
He wrongly think the cost (value) as Cost Centre in Accounting Software.
So, Be Cool...
If it's general repair maintenance then ok otherwise.

General repair & maintenance sounds good for indirect costs. Repairs and maintenance for factory and vehicle maintenance which is used for transportation inwards.

I would like to use indirect cost criteria for vehicles maintenance used in the supply of goods to customers. Then why can't we use it as inventory cost? 

Ok forgot vehicle is capex and has its own treatment. Maybe include fuel costs into inventory?

If proper absorption costing is utilized then in each cost centre proper absorption should be used .

That is for ABC sir where indirect costs are allocated to direct costs. I know full cost plus pricing method as well where opportunity costs are also included without cost center issues. Just prime costs and overheads make a wonderful meal to cost a product. Anyways, did anyone went through my blogspot? I invented a real pricing technique which rallies a balance sheet plus gives the price of the product. I did not receive any criticism on that

Do not make it complex .
ABC costing does not applies here.

Your the saying same thing what I said. It's not ABC. Cheers

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