Product Costing Example

Budget
Snowboards Skateboards

Direct Labor $3,000,000 $4,500,000

Direct Material $5,000,000 $6,000,000

Units 1,000,000 units 1,500,000 units

Total budgeted overhead costs are $15,000,000 allocated

base is direct labor dollars.
Actual
Snowboards Skateboards

Direct Labor $3,200,000 $5,270,000

Direct Material $5,600,000 $5,950,000

Units 800,000 units 1,700,000 units

Total actual overhead costs were $16,000,000.

Standard Costing
Snowboards Skateboards

Direct Labor

Direct Material

Overhead

Units

Total cost

Per Unit cost

Standard Costing
Snowboards Skateboards

Direct Labor $3,000,000 $4,500,000

Direct Material $5,000,000 $6,000,000

Overhead 15,000/(3,000+4,500)*3,000,000= 15,000/(3,000+4,500)*4,50

6,000,000 0,000=
9,000,000

Units 1,000,000 units 1,500,000 units

Total cost 14,000,000=3000+5000+6000 19,500,000=4500+6000+90

00

Per Unit cost 14 13

Actual Cost
Snowboards Skateboards

Direct Labor

Direct Material

Overhead

Units

Total cost

Per Unit cost

Actual Cost
Snowboards Skateboards

Direct Labor $3,200,000 $5,270,000

Direct Material $5,600,000 $5,950,000

Overhead 16,000/(3,200+5,270)*3,200,000= 16,000/(3,200+5,270)*5,270,

6,044,864 000=
9,955,136

Units 800,000 units 1,700,000 units

Total cost 14,844,864=3200+5600+6044.864 21,175,136=5270+5950+9955

.136

Per Unit cost 18.55608 12.45596

Normal Costing
Snowboards Skateboards

Direct Labor

Direct Material

Overhead

Units

Total cost

Per Unit cost

Normal Costing
Snowboards Skateboards

Direct Labor $3,200,000 $5,270,000

Direct Material $5,600,000 $5,950,000

Overhead 15,000/(3,000+4,500)*3,200,000= 15,000/(3,000+4,500)*5,270,00

6,400,000 0=
10,540,000

Units 800,000 units 1,700,000 units

Total cost 15,200,000=3200+5600+6400 21,760,000=5270+5950+10540

Per Unit cost 19 12.8