ADMS 3510 Study Guide - Midterm Guide: Target Costing, Variable Cost, Unit Price

• School: York University
• Department: Administrative Studies
• Course: ADMS 3510
• Professor: Jamison Aldcorn

Document Summary

Total overhead costs/ direct manufacturing labour hour = predetermined rate. Unit cost = direct materials + direct labour(*labour required) + moh (*labour required) Labour hours / units = hour required per unit. Activity base(1) cost driver(2) total budget cost(3) activity(4) pool rate. Purchase-orders #orders cost from departments" actual # (3)/(4) Setting up #setups . 4 hierarchies: facility-sustaining costs- executive salaries, product-sustaining costs- quantity of setups, batch-level costs- number of batches- inspection also included, output unit-level costs- total units, kilos, litres, etc. Abc benefits: reliable budgeted costs, clearer picture of which product is allocating what costs, elimination of cross-subsidization, profitability, performance evaluation more reliable. Manufacturing company- units receive similar or same amount of direct material and conversion costs. Homogenous company- products like oil, milk, tv, dish- direct material and conversion costs. 3 methods to calculate the cost driver rates for the direct materials used: weighted average method, fifo method, standard costing method, weighted average method.