Page 74 - BA2 Integrated Workbook STUDENT 2018

Chapter 4

Costing products

Now we have looked at how to absorb overhead costs into individual products, we
can look at how to determine the full cost of a product.

From chapter 2, we saw that the total cost of a product is made up as follows:

Note the sub headings in the calculation.

$

Production costs:
Direct material 20
Direct labour 10
Direct expenses 15
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PRIME COST 45
Indirect material 10
Indirect labour 2
Indirect expenses 11

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TOTAL PRODUCTION OVERHEAD 23
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TOTAL PRODUCTION COST 68
Non-production costs:

Selling and distribution 12
Administration 10
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TOTAL COST 90

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Illustrations and further practice

Go over illustration 4

Try TYU 3 and 4

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