MGM222H5 Chapter Notes - Chapter 3: Subledger, Deutsche Luft Hansa, Cost Driver
Document Summary
Cement, oil, coca-cola: unit product cost=total manufacturing cost/ total units produced, same avg cost for every unit. Mo is indirect cost, hard to trace to particular job/product. Even if output fluctuates, mo remains relatively constant because of fixed costs. Timing of payment of mo varies aka yearly, quarterly, monthly payments: allocation base: measure of activity such as direct labour-hours or machine hours used to assign costs to cost objects. Most widely used: direct labour hours, direct labour cost, machine hours, units of product: predetermined overhead rate: est. total manufacturing overhead cost/est. total units in allocation base. Rate used to charge overhead costs to jobs. Overhead application: process of charging manufacturing overhead cost to job cost sheets and to the work in process account. Need to know accounting system"s valuation of completed jobs before end of accouting period. If computed frequently, por would be influenced by fluctuations in seasonal factors.
