1. Product Costing= determining the cost associated with a product -Reasons for product costing-Variable, fixed and mixedHL: 2007, 2003 2. Product Costing1. Product = anything that is manufactured for sale e.g. iPhone2. Product Costing = determining the cost associated with a productiPhone 5 Materials = Manufacturing Cost = 3. Product Costing iPhone 5Materials = $199 = 155Manufacturing Cost = $8 = 6Total = $207 = 161 4. Product Costing3. Manufacturing Costs incurred: +Direct Labour +Direct Expenses = Prime Cost= direct cost excl. fixed costs + Variable Factory Overheads + Fixed Factory Overheads = Factory or Manufacturing or Production Cost 5. Product Costing4. Reasons for Product Costing:i Fixing Selling Price note: Selling Price = Cost Price + Profitii Control = comparing budgeted costs with actualiii Stock Valuation = to complete trading and profit and lossaccounts 6. Product Costing5. Variable Vs Fixed Vs Mixed For Example:i Direct Materialsii Direct Wagesiii Overheadsiv Administration Expenses
