Two methods are used for expense application during product and service costing operations:
- Actual Costing Method: The method that uses physical expenses included in finished product costs. Since overheads cannot be determined clearly, periodic overheads are distributed to finished products using a specific method.
- Planned Costing Method: Measurable quantities such as quantity, value, quality and capacity are defined as planned. When this method is used, periodic costs determined as planned are applied to finished product costs, and differences calculated according to end of period information are transferred into related finished product and difference accounts.
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