Depreciation is generally not apportioned directly to the cost of a product; it is first charged to manufacturing overhead, which is then apportioned to the cost of the product. Manufacturing overhead can be allocated on the basis of hours worked. For example, if the total manufacturing overhead for the month is $1,000, and the actual hours worked on Product A are 30 hours, and the actual hours worked on Product B are 20 hours, allocate the manufacturing overhead.
Manufacturing cost allocation rate = manufacturing cost / (product A actual working hours + product B actual working hours) = 20, product A share of manufacturing costs = product A actual working hours * manufacturing cost allocation rate = 30 * 20 = 600, product B share of manufacturing costs = product B actual working hours * manufacturing cost allocation rate = 20 * 20 = 400.
Accounting entries: debit: Production cost - product A 600, debit: production cost - product B 400, credit: manufacturing overhead 1000.
Depreciation (depreciation) is the decline in the value of assets. In both business and national accounts depreciation refers to the monetary estimate of the value of capital consumed over the period examined. It is also called capital consumption allowance in national income accounts.
Depreciation is the transfer value of a fixed asset that is periodically charged to cost. The value of a fixed asset after use, as the fixed asset wears out and is gradually produced; and by law enters into the cost of products and expenses in monetary terms, forming part of the cost of products and period expenses, and is compensated for out of realized gains.