Management and Organizational Studies 3370A/B Chapter Notes - Chapter 5: Cost Driver, Xml, One Unit

• School: Western University
• Department: Management and Organizational Studies
• Course: Management and Organizational Studies 3370A/B
• Professor: Bill Dawson

Document Summary

A company produces many units of a single product. One unit of product is indistinguishable from other units of product. The identical nature of each unit of product enables assigning the same average cost per unit. Many different products are produced each period. The unique nature of each order requires tracing or allocating costs to each job, and maintaining cost records for each job. Charge direct material and direct labour costs to each job as work is performed. Manufacturing overhead, indirect materials and indirect labour, are allocated to all jobs rather than directly traced to each job. An allocation base, such as direct labour hours, direct labour dollars or machine hours is used to assign manufacturing overhead to individual jobs. It is impossible or difficult to trace overhead costs to particular jobs. The predetermined overhead rate (pohr) used to apply overhead to jobs is determined before the period begins. Estimated total units in theallocation base for the comi.