Product costing procedure with any example.

Question

Accepted Answer

Product costing procedure involves determining the total cost of producing a product.

Identify all the direct and indirect costs associated with producing the product.
Allocate the costs to the product based on a predetermined cost driver.
Calculate the total cost of producing the product by summing up all the allocated costs.
Example: A company manufacturing bicycles would identify direct costs such as materials and labor, and indirect costs such as rent and utilities.
The cost driver could be the number of bicycles produced, and the costs would be allocated accordingly.
The total cost of producing a bicycle would be the sum of all the allocated costs.

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