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Abdul Rahim Said Rahim
, Senior Executive - Business Development , Al Ruwais Plastic Products Trading LLC
تاريخ النشر: 2013/06/21
As factory rent is not identifiable from the product like raw material and direct labour cost, Therefore, it can't be a direct cost. Also, it is not incurred specifically for a product, so doesn't qualify for direct expense.
It is an overhead expense and will be charged in Cost of Goods Sold under overheads section.
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Santhosh Mathew , Assistant Manager Finance , GE-General Electric USA
in Accounting - Electricity charges are generally treated as indirect costs under the head "Utilities". In case the plant manufactures only one single product, then they are considered as direct costs, provided such charges are purely incurred for the production of such goods/services. Electricity charges for management or corporate offices cannot be included here.
In Costing - It is dependent on the costing methodology followed. If its Activity based costing it is included based on the product lines/assembly lines. In case of Absorption costing it will considered as overheads and apportioned to the cost of the product. If it is Standard Costing then it is considered as overheads and taken as a percentage of Sales/Cogs.
Generally each company decides its own PnL structure considering various factors like the industry standards, market conditions etc...