Scribd
Upload
28 views2 pages

Product Costing

Product costing is the process of calculating the total cost of manufacturing a product, which includes direct materials, direct labor, and manufacturing overhead. The total product cost is determined using the formula: Total Product Cost = Direct Materials + Direct Labor + Manufacturing Overhead. Understanding product costs is essential for pricing decisions, budgeting, forecasting, and profitability analysis.

Uploaded by

lopezali282
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
28 views2 pages

Product Costing

Product costing is the process of calculating the total cost of manufacturing a product, which includes direct materials, direct labor, and manufacturing overhead. The total product cost is determined using the formula: Total Product Cost = Direct Materials + Direct Labor + Manufacturing Overhead. Understanding product costs is essential for pricing decisions, budgeting, forecasting, and profitability analysis.

Uploaded by

lopezali282
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd

Product Costing

Definition:

Product costing refers to the process of determining the total cost involved in manufacturing a

product. This includes direct materials, direct labor, and manufacturing overhead.

Components:

1. Direct Materials (DM)

2. Direct Labor (DL)

3. Manufacturing Overhead (MOH)

Formula:

Total Product Cost = Direct Materials + Direct Labor + Manufacturing Overhead

Example:

DM = $50, DL = $30, MOH = $20

Total Product Cost = $50 + $30 + $20 = $100

Types of Product Costs:

- Fixed Costs

- Variable Costs

- Mixed Costs

Importance:

- Helps in pricing decisions

- Budgeting and forecasting


- Profitability analysis

You might also like