Cost Allocation of Fixed Assets

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vinu

vinu (Querist)

16 July 2011 Can we apportion cost of a fixed asset to a product while calculating cost of a product?

CA Navin Jain

CA Navin Jain (Expert)

16 July 2011 yes, you can do that

vinu

vinu (Querist)

16 July 2011 Sir, how can we allocate cost of a fixed cost to a product.iam accountant of a garment factory,so while calculating cost of a shirt ,how can we apportion cost of a fixed asset to a shirt.plz help

CA Navin Jain

CA Navin Jain (Expert)

16 July 2011 IF FIXED ASSETS IS DIRECTLY ATTRIBUTABLE OF THE PRODUCT THEN ITS EASY TO ALLOCATE THE FIXED COST.

BUT IF FIXED ASSETS IS INDIRECTLY ATTRIBUTABLE OF THE PRODUCT THEN NEED TO FIND THE PERCENTAGE OF FIXED COST ATTRIBUTABLE TO THE PRODUCT

vinu

vinu (Querist)

16 July 2011 ok sir,if FA is directly attributable to the product then how is it calculated?what is the procedure?

Secondly if Fixed asset is indirectly attributable to the product then how is it calculated.PLz expalin.Note that sir,it is to find out the cost of product in a year.

CMA Ramesh Krishnan

CMA Ramesh Krishnan (Expert)

16 July 2011 Fixed asset cost is not an operating cost hence we cannot apportion to the product. Fixed assets are capitlised and depreciation only can be calculated

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