ADMN 3021H Chapter Notes - Chapter 5: Greeting Card, The Need, Cost Driver
16 May 2017
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Job-order costing: many different products are produced each period, products are manufactured to order, the unique nature of each order requires tracing or allocating costs to each job, and maintaining cost records for each job, ex. Why use an allocation base: manufacturing overhead consists of many different items ranging from the. Manufacturing overhead application: the predetermined overhead rate (pohr) used to apply overhead to jobs is determined before the period begins, pohr = estimated total manufacturing overhead costs/estimated total units in the allocation base. Computation of the unit cost: the average unit cost should not be interpreted as the costs that would actually be incurred if an additional unit were produced. Choice of an allocation base for overhead cost: the allocation base used in the pohr should drive the overhead cost, a cost driver is a factor that causes overhead costs.
