Start networking and exchanging professional insights

Register now or log in to join your professional community.

Follow

Factory electricity bill paid are 1. Capital Exp 2. Direct Exp 3. Direct Cost 4. Operating Exp?

user-image
Question added by Abdul Rahim Said Rahim , Senior Executive - Business Development , Al Ruwais Plastic Products Trading LLC
Date Posted: 2013/06/21
Qamar Zaman Khan
by Qamar Zaman Khan , Financial Analyst , R & E Business Solutions

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.

Khaled Abdelrehim ACCA DipIFR CMA
by Khaled Abdelrehim ACCA DipIFR CMA , Financial Analysis Assistant General Manager , Khalda Petroleum Company

indirect cost - factory overhead

manaf almas
by manaf almas , Auditor , DAR AL NUZUM PUBLIC ACCOUNTANTS

WORK COST OR FACTORY OVERHEAD

Mahmoud Ghazi
by Mahmoud Ghazi , Sr. Supervisor Budget & Analysis , Orange

it should be assigned to the operating expense at the operating section at the statement income and cash flow, it's a manufacturing overhead.

Mubeen Ahmad
by Mubeen Ahmad , Head Internal Audit , FF Steel (PVT) Ltd.

This is a factory overhead expense

Santhosh Mathew
by 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...

Factory Electricity Bill is not part of above mentioned expenses.
This will be charged to "Factory Overhead" i.e.
Indirect Expenses.

Bilal  Yaqoob
by Bilal Yaqoob , AP Section Head , Leejam Sports Company

FACTORY OVERHEAD Exp.

More Questions Like This

Do you need help in adding the right keywords to your CV? Let our CV writing experts help you.