Treatment of Interest on working capital

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Sujit Mandal

Sujit Mandal (Querist)
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22 May 2008 What is the accurate method of allocation of interest on Working capital to products.

R.V.RAO

R.V.RAO (Expert)
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23 May 2008 method of allocation of interest on Working capital to products is done either on quantity of units produced if measurable.
otherwise turnover ratio in which each product contributes to final gross turn over of the entity.
contribution of each product (if it can be ascertained ) can also be a basis for allocation of interest on working capital to products.
sale price minus variabe exp. will give contribution .
R.V.RAO