Product Costs and Job costing Versus Process Costing
Go to www.voutube.com and search for clips from the show Unwrapped on Food Network or How It's Made on the Discovery Chanel. Watch a clip for a product you find interesting.
Discussion Questions
1. Describe the product that is being produced and the company that makes it.
2. What raw materials are used to make this product?
3. What indirect materials are used to make this product?
4. Describe the jobs of the workers who would be considered "direct labor" in the making of this product.
5. Describe the jobs of the workers who would be considered "indirect labor" in the making of this product.
6. Define manufacturing overhead. In addition to indirect materials and indirect labor previously described, what other manufacturing overhead costs would be incurred in this production process?
7. If the company uses Volume based to estimate overhead cost to this product, what should be the cost driver or the base of overhead rate.
8. Activity Based Costing (ABC) is increasingly popular as a useful managerial tool to 1) measure costs of resource consumed and 2) assign cost to products and services. Identify the reasons that ABC has gained popularity in recent years.
9. If the company uses Activity Based Costing, identify which activities and their cost drivers should be used to allocate the overhead cost?
10. Would a job order costing system or a process costing system be used for this production process? Do explain.