MGT 5 Lecture Notes - Lecture 5: Outsourcing, Variable Cost
12 Oct 2018
School
Department
Course
Professor
Document Summary
^ break even point is going to be greater than 9700. Units = 640; savings = 7040 7040/640 = 11. Break even point = 9060 + 42,240/11 = 12,900. Dl and rm are different from oh. Oh is problematic because it"s hard to factor it into the cost of each unit. Can"t wait to give a customer a bill with adjustments made for oh, need to estimate. Take budgeted oh and divide by budgeted driver, which gives the predetermined. Driver is the item that we say makes sense to use as an instrument to allocate overhead. Ex: machine hours because it affects a bunch of other overhead costs like training, rent, depreciation, etc. So if a customer"s order takes 10% of total machine time, they will be charged for 10% of the overhead and so on. Take the pdohr and multiply it by the actual driver to get the oh applied (pdohr)(actual driver) = oh applied.
