Set Up Costs - Semi Variable
Dear Experts,
We incur set up costs that are semi variable.
In other words for $1000 is incurred for every 500 units produced ( $2 per unit). Suppose a product is produced only 100 units in a month, that means $200 ( $2*100 units) is absorbed on the product and remaining $800( $1000-$200) will be unabsorbed.
How this unabsorbed $800 , should be treated during correspondind month end.
2. My set up costs includes Labour, Machine & Power . We have captured set up costs under a single activity type.
Say we incurred $200 in a month, how can we split labour , machine & Power. what is the solution to split set up costs and post to
corresponding Labour , Machine and power cost center.
Thanks
Sanjai
Hi
1. When you calculate actual activity price: It will be higher than Plan Price of 2$ because of lower utilization... Later on when you revaluate prod orders from CON2, there will be No Under abs of overhead
2. Usually, in your case, Set up cost is better represented by machine hrs than Labour hrs.. So, it is advisable to track Set Up cost as one single cost instead of Splitting up into three
You can create 6 Act types i.e. Set Up - Machine, Labor, Power and Other Machine, Labor, power... But that will only complicate the things
br, Ajay M
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