LAS 15

A. Product or Service(single or multiple product/service)

To calculate the Overhead cost follow the given formula;
Tot Overhead Cost per Month ÷ Total Amount Produced per Month = OC per Item/set
Item Cost/Month Total Overhead
Production/Month Cost/Item
Mini Checklist Pad 3,980 2,000 1.99

Identify your Depreciation Cost

Tools and Equipment:

1 printer 1 computer 2 trimmer
2 scissors 2 glue

Supplies
Glue Ink
Paper

Depreciation Cost
Item Unit Qty. Total Yrs. Annual ÷ 12 mo.
Price Use DC
Printer 10,000 1 10,000 2 5,000 416.67
Scissors 100 2 200 3 66.67 5.56
Computer 15,000 1 15,000 5 3,000 250
15,200 8,066.67 672.23

COSTING: You May choose the form appropriate to you Business Idea
1. DIRECT MATERIAL COST/PRODUCT
Materials Cost Qty. Total Cost per
item
Kraft Paper 100 40 pcs 100
Jute Rope 50 50 meters 50
Kraft Board 199 50 pcs 199
Ink 250 4 pcs 1,000
Plain Color 150 20 pcs 150
Wrapping Paper
TOTAL 1,499.00
2. DIRECT LABOR COST
4 workers can finish five mini checklist pad in 5 days. 1 worker works for 400/day ÷
8hrs/day = 50 Man hour
Worker Rate Man Hour/Pad Labor Cost
Mini Checklist Pad 50 32 man hour 1,600.00
Maker
TOTAL 1,600.00
3. OVERHEAD COST
Item Cost/Month Total Overhead
Production/Month Cost/Item
Electricity 1,000 24 hrs. ÷ 3 days =
Internet 700 8 × 4 workers = 1,700 ÷ 32 =
Depreciation Cost 672.23
Total 2,372.23 32 53.125
4. TOTAL COST PER ITEM
Direct Direct Labor Overhead Total Cost
Material + Cost + Cost = per Item
Cost
1499.00 1,600.00 53.125 3,152.125

Another method of computing a product cost:

1. DIRECT MATERIAL COST PER ITEM
Raw Material Buying Cost Qty. per Item Cost per item
Jute Rope 50 50 meters 50
Kraft Paper 100 40 pcs. 100
Kraft Board 199 50 pcs. 199
Plain Color Wrapping 150 20pcs 150
Paper
Ink 250 4 pcs 250
Total 749
2. DIRECT LABOR COST PER ITEM
1 WORKER = 400.00/day ÷ 8hrs = 50.00/man-hour ÷ 60 min. = 0.8333
Activity Man - Hour Rate Cost per Item
Printing 60 min 0.8333 49.998
Combining 30 min 24.999
Cutting 20 min 16.666
Sewing 40 min 0.8333 33.332
Packaging 30 min 24.999
 Total 180 min = 3 hrs. 50.00 149.994
3. OVERHEAD COST/INDIRECT COST
Item Cost/Month Total Hours/Month Overhead Cost/
Hour
Internet 700 8 hours/ day
Electricity 1, 000 × 19.769
Depreciation Cost 672.23 15 days/mo.
Total 2,372.23 120 hrs.
Overhead Cost per item
Man-hour Overhead Cost Overhead Cost
× per Hour = per item
3 Hours 19.769 59.307
4. TOTAL COST PER ITEM

Direct + Direct Labor + Overhead + Total Cost per

Material Cost Cost per Item Cost per Item Item
Per Item
749 149.994 59.307 958.301