COMM 294 Chapter Notes - Chapter 3: Cost Driver, European Cooperation In Science And Technology, Finished Good
Document Summary
Utilized by companies that produce vast number of identical unit. Since each unit is identical, in theory each unit should cost the same to make. If there is 2 million spent on purchase and prep of ingredients to make 1 million units, you can assume each unit was same goes for packing. Prep + mixing/packaging = manufacturing cost (per package) Companies that use process costing include oil re ning, food and beverages, and consumer toiletries/paper products. Predetermined overhead rate -> allocate and equitable amount of moh per job. (estimated moh )/(estimated cost driver activity) = $/activity. Each job done by company is unique and since they are unique they have separate prices. Can vary in use of dl, dm or oh. Job costing not limited to manufacturers, many professional service providers and trades workers all use job costing to determine the cost of performing separate job.