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PROBLEM OF INDIRECT COST ALLOCATION

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PDF: Author(s): Kiseleva M. M., Yatsko V. A.,
Number of journal: 2(43) Date: May 2018
Annotation:

Three approaches to the allocation of indirect costs between the calculation units are examined. Special attention is paid to the need to choose a distribution base that ensures correct indirect cost allocation. Various known variants of selection of the indirect costs allocation base are investigated. An analytical study of the consequences of selection of the «marginal profit» indicator as the distribution base was made. It is shown that the use of this indicator in most cases leads to the receipt of incorrect results in calculation of the prime cost of production and evaluation of profitability.

Keywords:

expenses, prime cost, full prime cost, calculating, profitability, indirect costs, direct costs, cost allocation, cost allocation base, marginal profit.

For citation:

Kiseleva M. M., Yatsko V. A. Problem of indirect cost allocation // Business. Education. Law. 2018. No. 2 (43). P. 134–138. DOI: 10.25683/VOLBI.2018.43.226.