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Chapter 4
1.6 The cost card
A cost card is used to show the breakdown of the costs of producing output based on
the classification of each cost. A cost card can be produced for one unit or a planned
level of production.
The following shows the calculation of the cost for one unit of product X
$
Direct material 20
Direct labour 10
Direct expenses 15
–––
PRIME COST 45
Variable production overheads 10
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TOTAL VARIABLE (MARGINAL) PRODUCTION COST 55
Fixed production overheads 23
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TOTAL PRODUCTION (ABSORPTION) COST 78
Non-production cost 22
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TOTAL COST 100
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