Each cost is allocated by product based on its nature. Follow examples of how to determine the allocation logic for each cost.
- Now comes the time to determine…how to allocate cost by product.…At this point you should have all your…cost data gathered and prepared.…You should have already determined if your costs…are direct or indirect and fixed or variable.…Let's review then the big allocation families.…First, the no brainers, the fully allocated cost…for a single product.…This is when the entire cost of something…is just for one product.…For example, if you only make one product…that has plastic, you can allocate 100%…of your plastic costs to this product.…
Here it's pretty easy to match cost with product.…In other cases, there are costs that are definitely…product related, but concern more than one product.…Here you need to decide how to split the cost…between those products.…Use common sense for this decision.…One way is to base your decision on how much material…is used to build each product.…For example, imagine that $500 worth of lemons…allowed you to make 2,000 lemonades…and 3,000 lemon snow cones.…
Say you need an average one lemon for two lemonades…
- Identify the purpose of cost-accounting.
- Define product profitability.
- Determine your baseline.
- Gather revenue and cost information for your analysis.
- Connect targets with profitability.
- Build your target baseline.
- Analyze pricing.
- Calculate probable product profitability.
Skill Level Intermediate
Excel 2016: Financial Functions in Depthwith Curt Frye2h 38m Intermediate
1. Understand Company Costs Related to Products
2. Determine Your Baseline
3. Plan for the Future
Analyzing your pricing3m 1s
Next steps1m 21s
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