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Title: Reporting of overhead variances: A cost management perspective
Authors: Durden, C.H.
Mak, Y.T. 
Issue Date: 1999
Citation: Durden, C.H.,Mak, Y.T. (1999). Reporting of overhead variances: A cost management perspective. Journal of Accounting Education 17 (2) : 321-331. ScholarBank@NUS Repository.
Abstract: In this paper we argue that if cost management is the primary purpose of a costing system, as opposed to external reporting, then it is often appropriate to report overhead variances as a period cost, rather than prorating these variances to various accounts. Further, we argue that reporting variances as a period cost may be appropriate in some situations even if external reporting considerations underlie the design of the cost system. However, a review of the accounting treatment of overhead variances in major cost/managerial accounting textbooks indicates a clear preference for proration of overhead variances between product costs and period expenses, compared to reporting the entire variance as a period cost (expensing). Textbooks typically argue that proration is theoretically more correct and expensing is only acceptable where the variance is immaterial. © 1999 Elsevier Science Ltd.
Source Title: Journal of Accounting Education
ISSN: 07485751
Appears in Collections:Staff Publications

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