Two positions have normally been taken with respect to the recording of fixed manufacturing overhead as an ­element of the cost of plant assets constructed by a company for its own use: a.    It should be excluded completely. b.    It should be included at the same rate as is charged to normal operations. What are the circumstances or rationale that support or deny the ­application of these methods?

Question

Two positions have normally been taken with respect to the recording of fixed manufacturing overhead as an ­element of the cost of plant assets constructed by a company for its own use:

a.    It should be excluded completely.

b.    It should be included at the same rate as is charged to normal operations.

What are the circumstances or rationale that support or deny the ­application of these methods?

 

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