ACC 100 Lecture Notes - Lecture 5: Cost Driver, Income Statement, Direct Labor Cost
21 Apr 2016
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Firms operating in job order industries produce a wide variety of services or products that are quite different from each other. Unit cost computer by dividing total job costs by units produced for that job. Fairly easy to trace direct material and direct labor, but manufacturers overhead is not thus it applied to production. Firms producing identical products or services can use a process costing accounting system. Costs of accumulated by process or department. Unit cost computed by dividing process costs for the period by the units produced in the period. Actual vs. normal cost (measure the costs associated with production) Only actual costs of direct material, direct labor, and overhead are used to determine unit cost. Challenges for over head costs is that overhead is not incurred uniformly throughout the year. Determines unit cost by adding actual direct materials cost, actual direct labor cost, and estimated overhead cost to determine unit cost.
