ACCT 1A Lecture Notes - Lecture 12: Variable Cost, Cost Driver, Activity-Based Costing
15 Jun 2020
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* some might have one or two or five supervisors. If there is one supervisor for each department and do not go anywhere else (dedicated supervisor) you can call it a direct cost. **unless the electricity company gives 3 separate connections: one connection comes in here only then it will be a direct cost. Usually the variable would be machine hours or labour hours or number of units something that indicates quantity. Maybe not because we have allocated all the overhead cost using only one driver. In this example, we use machine hours only. The salaries depend on how much time they spend here or here not base on machine hours. Rent depends on area not on machine hours. In conclusion it"s not accurate but easier to calculate and cheaper to maintain. The only deferment is the allocation of indirect cost. Supervisor salary: based on number of units rent: based on area.
