Module - II (Session 6,7,8)
Module - II (Session 6,7,8)
Module - II (Session 6,7,8)
Product Costing
I f y o u a r e p r o d u c t m a n a g e r f o r p r o d u c t- X , w i l l
you accept the proposal?
Teaser # 2
What cost items you will take into account for calculating the total cost for
the product “Crocin Advance”?
COST has a PURPOSE
• Financial Reporting – COGS and value of closing
inventory
• Pricing Decisions – Regular market or special orders
• Strategic decision – Continue or discontinue
• Strategic decision – Manufacture or outsource
i. Prime Cost
ii. Overheads
iii. Support Department Cost
iv. Fixed Cost / Period Cost
Activity Based Costing
Caselet
• Total overhead cost = Rs. 50,000
• Overhead cost distributed on the basis of direct labor hours (DLH)
• Labor rate – Rs. 100 per hour
• DM – Direct Material
A B C
Units 1000 1000 1000
DLH 250 300 450
DM 75000 90000 120000
A B C