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Specifics of Allocation of Indirect Expenses by Construction Enterprises

Journal: Oblik i finansi (Vol.1, No. 76)

Publication Date:

Authors : ; ;

Page : 63-69

Keywords : construction enterprises; indirect expenses; general production expenses; base of allocation; methods of allocation of indirect expenses;

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Accounting and allocating indirect expenses are an important issue of calculation in construction because their cost price share in construction and installation tends to be increasing steadily for the majority of construction companies. The article explains theoretical and practical aspects of accounting indirect expenses and elaborates recommendations as to improved distribution of indirect expenses with due account for the industry specific features. The methods of allocation of indirect expenses (method of direct allocation, method of consecutive allocation, method of reciprocal services) are under consideration. Applying the reciprocal services allocation method by construction enterprises has been proved as expedient. Appropriate bases have been proposed for the allocation of general expenses of production by structural manufacturing divisions of a construction company, which clarifies the specific features of construction in the best way. It is found that regardless of the method of allocation of indirect expenses as applied within an enterprise the accounting practice always has certain inaccuracy. Thus, the best result of selecting the method of allocation of indirect expenses may consist in obtaining an acceptable result that would reduce such inaccuracy as down as possible.

Last modified: 2017-10-04 19:41:11