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Product Costing= determining the cost associated with a product         -Reasons for product costing          -Variable, f...
Product Costing1.   Product = anything that is manufactured for sale (e.g. iPhone)2.   Product Costing = determining the c...
Product Costing                                 iPhone 5  Materials = $199 = €155  Manufacturing Cost = $8 = €6  Total = $...
Product Costing3. Manufacturing Costs incurred:             +Direct Labour             +Direct Expenses             = Prim...
Product Costing4. Reasons for Product Costing:    (i) Fixing Selling Price (note: Selling Price = Cost Price + Profit)    ...
Product Costing5. Variable Vs Fixed Vs Mixed   For Example:      (i) Direct Materials      (ii) Direct Wages      (iii) Ov...
Product costing
Product costing
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Product costing

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Transcript of "Product costing"

  1. 1. Product Costing= determining the cost associated with a product -Reasons for product costing -Variable, fixed and mixed HL: 2007, 2003
  2. 2. Product Costing1. Product = anything that is manufactured for sale (e.g. iPhone)2. Product Costing = determining the cost associated with a product iPhone 5 Materials = Manufacturing Cost =
  3. 3. Product Costing iPhone 5 Materials = $199 = €155 Manufacturing Cost = $8 = €6 Total = $207 = €161
  4. 4. 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
  5. 5. 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
  6. 6. Product Costing5. Variable Vs Fixed Vs Mixed For Example: (i) Direct Materials (ii) Direct Wages (iii) Overheads (iv) Administration Expenses
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