Accounting (AS)·Overheads · NSSCAS 5.1.2
Absorption costing: allocation & apportionment
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Every chair that leaves a factory must help pay the rent. In this lesson you will learn what absorption costing means, master the four cost words examiners love — direct, indirect, variable and fixed — and build a full overhead apportionment table for a Windhoek furniture factory, including re-apportioning the service department. This exact table is a favourite structured question in Paper 2's cost and management accounting section.
What you'll learn in this lesson
By the end you should be able to (NSSCAS Accounting (AS) 5.1.2):
- define absorption costing
- define direct, indirect, variable and fixed costs
- allocate and apportion overheads between production and service departments
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