RSM222H1 Chapter Notes - Chapter 5: Direct Labor Cost, European Cooperation In Science And Technology, Cost Driver
Document Summary
Costing method that includes all manufacturing costs as part of the cost of a finished unit of product. All manufacturing cost = direct materials, direct labor, variable overhead and fixed overhead. Used in manufacturing situations where company produces many units of the same product for long periods at a time on a continuous basis. Since each unit is the exact same avg cost for each unit is the same. Unit product cost = total manufacturing cost / total units produced. System used in situations where many different products or services are produced each period. Costs are traced and allocated to jobs and then cost of job is divided by total units in that job. Record listing the type and quantity of each item of the materials needed to complete a unit of product. Issued when an agreement has been reached with the customer concerning quantities, prices, and shipment date.
