Entity: UNIT-OF-PRODUCTION
Unit-of-production refers to a method used in accounting to allocate costs or calculate depreciation based on the output or usage of a long-lived asset. It is commonly used in industries like manufacturing and oil and gas.
UNIT-OF-PRODUCTION
Etymology
The term 'unit-of-production' originates from the accounting field to describe a method of cost allocation based on the output or usage of assets.
Definition
Unit-of-production is a method used in accounting to allocate costs or calculate depreciation based on the output or usage of a long-lived asset.
Historical Context
The concept of unit-of-production has been used in various industries such as manufacturing and oil and gas to accurately reflect the depreciation of assets based on their productive output.
Cultural Significance
Unit-of-production plays a crucial role in financial accounting, ensuring that costs are allocated accurately and fairly based on the actual usage of assets.
Related Concepts
- Units-of-production method
- Production unit
- Unit of production method
See Also
A method in accounting that allocates costs or calculates depreciation based on the output or usage of a long-lived asset.