ACCT30210 Lecture Notes - Lecture 10: Indirect Costs
Document Summary
Do it for a batch of products and services that are all similar. Need to know the difference between overhead consumed by complex products vs simple products. *cost subsidization = when the simple products subsidize the complex products. Indirect mfg. labor costs (e. g. supervision) supports direct mfg. labor, Abc uses a four-level cost structure to determine how far down the production cycle costs should be pushed. When thinking of product-level costs, we"re thinking of product lines. Unit-level: relates to the activity of running the machine. St. helen"s glass costs: ,800 48% Indirect costs: allocation rate of * 104 (labor hours) = , 640. Total costs: ,070 40% of total costs (compared to the above. So they were unhappy because they were being charged too much. Indirect costs: * 96 = ,360 add in direct professional labor (,280) Direct costs: ,570 add in direct professional labor (,720) Total costs: ,930 60% of costs (compared to the above 48%)