Manufacturing Costs and Cost Functions

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  About 5% is for the general administrative functions and 15% is for the sales and distribution functions. The remaining 80% is to be used for the manufacturing process.

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  The variable cost will increase in total while the fixed cost will remain the same Variable cost per unit is Direct materials $20 Direct manufacturing labor 3 Variable manufacturing overhead 6 Total variable cost = $29 and so 2,000 tires it is

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  On the other hand, under absorption costing approach, costs are differentiated on the basis of functions i.e., manufacturing overhead is separated from selling and administrative overhead and not on the basis of fixed or variable nature of costs.

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  This posting discusses the manufacturing costs of JTI. It also gives you the details of the cost drivers and how these are used in the process.

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  It allows managers more timely determination of product costs during the manufacturing process. C. It provides a more accurate cost of the job or products being processed. D. Because indirect costs are easy to trace to products and jobs.

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