CAS 11- Administrative Overheads

Question 1

Definition

Answer 1

Cost of all activities relating to general management and administration of an enterprise

Question 2

Principles of measurement

Answer 2

1. Valued at cost of all resources consumed in general mgmt and admin of the enterprise
2. Treatment of leases
   a) Operating - Part of admin OH
   b) Financial- Lease - AOH, Principal,int- finance cost
3. Cost of software-amortised-lifetime
4. Admin services-outside-valued-invoice-all taxes and duties-net of refunds- no cash discount

Question 3

General Principles

Answer 3

1. Finance cost is not included
2. Abnormal cost is not included
3. Imputed cost is included ( only materials)
4. Depreciation- based on benefit received
5. Credit or recoveries shall be reduced
6. Subsidy, grant or incentives shall be reduced
7. Penalties ,damages, fines paid to stat auth not cost
8. Cost-standard rates- variance is part of cost

Question 4

Assignment of cost

Answer 4

1. AOH - assign-traceable- cost object- economically-feasible manner
2. Based on two principles
   a) Cause and Effect
   b) Benefits received

Question 5

Presentation

Answer 5

1) Presented as a separate cost head in the cost statement

Question 6

Disclosure

Answer 6

1. Basis of distribution
2. Abnormal cost is includable
3. Penalties, damages or fines paid to stat authorities
4. Subsidy, grant, incentives recvd is reduced
5. Related party transactions
6. Forex Transactions