Efficiency Based Absorption Costing

Efficiency Based Absorption Costing

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Please note that the content of this book primarily consists of articles available from Wikipedia or other free sources online. Efficiency Based Absorption Costing is the discipline of accounting, which is concerned with establishing methods or techniques to allocate fixed costs to each product or service an organization produces. The Efficiency Based Absorption Costing is an alternative or even improved technique of absorption compared to previous established techniques as it takes into account the different level of overhead utilization efficiency of products. EBAC highlights the problem with use of the Single Standard Absorption Rate to allocate fixed costs to products. The Single Standard Absorption Rate was used for simplicity purposes. However, it ignores the different level of efficiency of each product or service in incurring the fixed cost and as a result, a high degree of cross subsidization occurs between more efficient and less efficient products and services. In a nutshell, EBAC focuses on the efficiency aspect by identifying the products' different level of overhead utilization efficiency.show more

Product details

  • Paperback | 56 pages
  • 149.86 x 223.52 x 5.08mm | 113.4g
  • DIC Press
  • United States
  • English
  • 6135849638
  • 9786135849639