MGMT 30B Lecture Notes - Lecture 3: Direct Labor Cost
8 Jun 2016
School
Department
Course
Professor
Document Summary
Methods of accumulating product costs: absorption costing, job-order costing. If many different types of products are being produced each period. All costs are traced to each job itself. Raw materials that can be directly traced to the product iphone: glass, processor, camera, battery, aluminum, led light, wiring. Direct materials cost = quantity of materials used x per unit cost of materials used. All traceable costs related to product itself iphone: design, physically putting it together, factory supervisor. Direct labor cost = quantity of labor used x per labor unit cost of labor used. Steps: estimate the total allocation base required for production (hours) We need an allocation base because we can"t trace it. Computer hours iphone: direct labor hours: estimate the total variable manufacturing overhead. Estimated variable manufacturing overhead cost per unit of allocation base x estimated total amount of allocation base: estimate total manufacturing overhead. Estimated total fixed manufacturing overhead: compute a pre-determined overhead rate.
