Process Costing

Yvi,

In my opinion, you need to identify the major cost elements for new production line and work out a means to collect the data for these elements to determine the costing of products from that line.

The cost elements can include:

-Materials

-Labour

-Machine

-Overheads(fixed and variables)

-Expenses that might require allocation on the products

Iam not sure, what you mean by process costing. Do you refer to Standard or Actual or FIFO ? The way you determine the cost, will depend on the method you choose.

This is my initial thought. I hope it helps. Thanks

If I could add to that thought, I would suggest you identify the value-added vs nonvalue-added operations. Things like setup, move, wait, and queue times add lots of hidden costs to an operation as does overproduction, scrap, rework, storage, and non-standardized products and processes.

Basically, if it's not physically transforming raw material into what the customer is paying for, it's not adding value.

Hi,

Thanks so your reply. Greatly appreciate it.

Process Costing will be the whole process cost that we need to set-up the whole line and how much will the be cost of our product after setting up the line.

Coz currently, we are sub-contracting our other processes. My boss ask me if ever we start-up our own line for this certain process, will it be lesser expense to us or we just break even? If the cost per pc if we do in-house is almost the same as sub-contracting, then maybe we just continue to do the sub-contracting.

If we can save, then we will start up the line.

I have identified material cost, utility cost, labour cost, machine depreciation value as of the moment.

<.......process costing.......searching the net.....>

Why? Not everything is available there!

The organisation's purchasing people and operations managers would be a good start for research. The rest is allowances, estimations and spreadsheets.

Dear,

It is a streamline and much big task.

for this purpose, you have to split the project in all activities, and make activity plan for that project,

thn define the resources for each activity, (resources means Human, material, labor etc.)

then make cost of each resource.

then each activity will share some percentage of the resource.

then add all activity cost.

then chilllllll

if you need any help, you will be welcomed.

tell me the project, if there would be no hinderance.

Take care,

Mustanir Hasan

+923219406292

Hello,

Thank You for all your reply.

I just do the basic costing like Man, method, machine etc..something like that.

We are just a small company and we usually do mutlitasking so we also need to have some background on this costing. :-(

Anyway, thanks to all. I have some insights from what u all write here.