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What is Traditional Manufacturing Costing System?
Traditional Manufacturing Costing system stresses on Uniformity and Standardization of Cost distribution methods.
1. All Non-manufacturing overheads first get grouped under broad categories, as Manufacturing Overheads, Administration Overheads, Selling and Distribution Overheads etc.
2. Subsequently, each category of Overhead is allocated to Manufacturing Centers based on a common parameter, as Labor Hour, Machine Hour etc.
3. Step-down methods are often followed for Allocation and Re-allocation between different Recipient centers
4. The Total costs finally allocated to a Manufacturing Center are then added for assignment to individual products/services
Challenges solved by Traditional Manufacturing Costing System Assignment Help:
The students might find it difficulty in allocation of manufacturing overhead costs. The traditional method allocates the indirect costs to the items manufactured on the basis of volume. To get this equation correctly and precisely is of extreme importance in cost accounting. One has to take into consideration volumes such as, units produced, direct labor hours or production machine hours.
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