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Process costing is an accounting methodology that traces and accumulates direct costs, and allocates indirect costs of a manufacturing process. Costs are assigned to products, usually in a large batch, which might include an entire month's production. Eventually, costs have to be allocated to individual units of product.
Direct Labor Cost: this basis is used when manufacturing is labor-intensive. Direct Labor Hours: it is used When workers are paid on the basis of their working hours. Prime Cost: the prime cost is used when the factory produces only one kind of product. Machine time: this basis is used when manufacturing is mostly automated.
CPU time (or process time) is the amount of time that a central processing unit (CPU) was used for processing instructions of a computer program or operating system. CPU time is measured in clock ticks or seconds. Sometimes it is useful to convert CPU time into a percentage of the CPU capacity, giving the CPU usage.
The latter utilize cost drivers to attach activity costs to outputs. [1] The Institute of Cost Accountants of India says, ABC systems calculate the costs of individual activities and assign costs to cost objects such as products and services on the basis of the activities undertaken to produce each product or services. It accurately identifies ...
Process manufacturing is also referred to as a 'process industry' which is defined as an industry, such as the chemical or petrochemical industry, that is concerned with the processing of bulk resources into other products. [2]
Manufacturing process management (MPM) is a collection of technologies and methods used to define how products are to be manufactured. MPM differs from ERP/MRP which is used to plan the ordering of materials and other resources, set manufacturing schedules, and compile cost data.
Abnormal costs arise because of any abnormal activity or event not part of routine business operations, such as accidents or natural disasters. By time: Historical costs and predetermined costs. Historical costs are costs incurred in the past. Predetermined costs are computed in advance on basis of factors affecting cost elements.
Through carefully planned equations, hierarchical listing of elements, standard calculations, checklists of project elements and other methods, [1] the project team adds in all expenses of a project, from labor to materials to administrative costs. These calculations formulate a Basis of Estimate which is, when completed, a number that can be ...