3. Basic full costing method
3.1 Principles
All expenses are processed for allocation to costs. We give priority to the criterion of destination, and neglect that of variability. Direct and indirect costs are treated differently.
In the simplest version, the level of activity is considered "normal". Taking into account the effects of under- or over-activity is the subject of a more sophisticated approach, with "rational allocation" of fixed costs, as we shall see later.
SCROLL TO TOP3.1.1 Allocation of direct expenses
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Basic full costing method
Rational" allocation of fixed costs
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It's important to understand that this article is only a brief introduction to the basics of cost accounting, which is a fundamental discipline in management and features prominently in all accounting training courses in France and the French-speaking world; in business schools, in university management courses and in establishments such as CNAM-INTEC.
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