Cost Centres Flashcards
Profit centres
Sections of a business to which costs can be charged, income can be identified and profit can be calculated.
Section of a business that make products or services and sell them.
Cost centre
Sections of a business to which costs can be charged.
Investment centre
Sections of a business to which costs can be charged, income can be identified and investment can be measured.
Overhead absorption rate
The rate used to absorb overheads into products or services.
Units of output method
A method of absorption based on dividing budgeted overheads by budgeted number of units to produce an OAR per unit.
Direct labour hours method
A method of absorption based on dividing budgeted overheads by budgeted direct labour hours to produce an OAR per direct labour hour
Machine hours method
A method of absorption based on dividing budgeted overheads by budgeted direct machine hours to produce an OAR per machine hour
