Page 10 - Managerial Accounting-MGT 145

Module 2: Cost Management

This unit focuses on three categories of cost

management: job costing, activity-based costing,
and process/production costing.

For a company that produces items for a job order, it
is easy to identify the direct materials and direct labor

needed to complete a specific job. However, how do
you determine direct materials if the company
uses a continuous assembly line?

It would be inefficient to track each unit of production

separately.
We also address how to allocate manufacturing
overhead.

Manufacturing overhead consists of costs not

directly related to the product, but necessary to run
the production process. This includes, but is not
limited to, factory equipment, factory rent, and

utilities (water/electric) for the factory.