Follow along as Rudolph Rosenberg allocates costs in an example to illustrate indirect cost-product allocation logic.
- Similar to direct costs,…indirect costs needed to be tied back…in some way to your products.…So cost and products that appear…to have no logical link…still need to be connected.…So you just have to find a logic…to spread in your costs over your products,…and you'll bump into two situations.…First, when that logic is available,…and second, when there's no logic to be found.…When there's a logic, you pretty much have your answer.…For example, you might have an employee…who is assigned to provide customer service…for one specific product.…
If that is the case, you put that person's salary…on that product.…You could also have him or her report…how much time is spent on each product…to apportion the salary accordingly.…In the other situation,…a logical cost product connection…might not seem to exist.…Let's consider office rent, which has…no link at all to any product in particular.…You can just apportion it as a percentage…of the revenue of each product…as is done with some direct cost product allocation cases.…
Another thing you'll encounter are big investments…
- 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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