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Standard Cost Accounting Analysis : Streetcars Rail coach Monthly Demand 15 40 Price $280 $350 Foundry Time (hrs) 3.0 2.0 Metalwork Time (hrs) 1.5 4.0 Total Time 4.5 6.0 Foundry Cost $136.88 $91.25 Metalwork Cost $30.94 $82.50 Raw Material Cost $120.00 $60.00 Total Cost $287.81 $233.75 Profit per Unit $ (7.81) $116.25
Production costs includes all costs associated with manufacturing a product, such as raw materials, labor, and overhead costs. Finished goods is the total value of goods ready for sale in the current accounting period. The formula for calculating WIP inventory is as follows: beginning WIP inventory + production costs – finished goods. [11]
Direct materials cost the cost of direct materials which can be easily identified with the unit of production. For example, the cost of glass is a direct materials cost in light bulb manufacturing. [1] The manufacture of products or goods requires material as the prime element. In general, these materials are divided into two categories.
Costs of materials include direct raw materials, as well as supplies and indirect materials. Where non-incidental amounts of supplies are maintained, the taxpayer must keep inventories of the supplies for income tax purposes, charging them to expense or cost of goods sold as used rather than as purchased.
The material cost of sales = m * μ * q, where m is the amount of material in one unit of finished goods. μ is the cost per unit of the raw material. The labour cost of sales = l λ q, where l is the amount of labour hours required to make one unit of finished goods; λ is the labour cost (rate) per hour.
[1] In the FIFO example above, the company (Foo Co.), using LIFO accounting, would expense the cost associated with the first 75 units at $59, 125 more units at $55, and the remaining 10 units at $50. Under LIFO, the total cost of sales for November would be $11,800. The ending inventory would be calculated the following way:
Indirect materials cost: Indirect materials cost is the cost associated with consumables, such as lubricants, grease, and water, that are not used as raw materials. Other indirect manufacturing cost: includes machine depreciation, land rent, property insurance, electricity, freight and transportation, or any expenses that keep the factory ...
The aim of MFCA is to enhance both environmental and economic performance through improved material and energy use. [1] Since 2011 a general framework for MFCA has been provided by the ISO 14051 norm. In order to improve material and energy efficiency MFCA aims to: Increasing transparency regarding material and energy flows and the respective costs