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

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Question ajoutée par Abdul Rahim Said Rahim , Senior Executive - Business Development , Al Ruwais Plastic Products Trading LLC
Date de publication: 2013/06/21
Qamar Zaman Khan
par 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
par Khaled Abdelrehim ACCA DipIFR CMA , Financial Analysis Assistant General Manager , Khalda Petroleum Company

indirect cost - factory overhead

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

WORK COST OR FACTORY OVERHEAD

Mahmoud Ghazi
par 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
par Mubeen Ahmad , Head Internal Audit , FF Steel (PVT) Ltd.

This is a factory overhead expense

Santhosh Mathew
par 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
par Bilal Yaqoob , AP Section Head , Leejam Sports Company

FACTORY OVERHEAD Exp.

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