Product Costing3. Manufacturing Costs incurred: +Direct Labour +Direct Expenses = Prime Cost (= direct cost excl. fixed costs) + Variable Factory Overheads + Fixed Factory Overheads = Factory or Manufacturing or Production Cost
Product Costing4. Reasons for Product Costing: (i) Fixing Selling Price (note: Selling Price = Cost Price + Profit) (ii) Control = comparing budgeted costs with actual (iii) Stock Valuation = to complete trading and profit and lossaccounts
Product Costing5. Variable Vs Fixed Vs Mixed For Example: (i) Direct Materials (ii) Direct Wages (iii) Overheads (iv) Administration Expenses
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