M2A1: Cost Flows in an Organization
Ramiro Trevino posted Oct 16, 2017 3:36 PM
. Describe the company and identify the division you manage.
The name of the company that I have selected is called Surlean Foods�. A company custom-protein partners of leading restaurant chains around the country. You won't find a product list at Surlean Foods. Just 30 years of sourcing, developing and manufacturing custom food products that make our customers menus more exciting and profitable.
. Think about the costs associated with developing and manufacturing your product. Identify whether the company would use process or product costing and describe why the selected method is most appropriate.
Because of the type of company, and its manufacturing, I have selected that it would be more in the area of product costing because Surlean, creates a product, and some of the costs include direct labor, direct materials, consumable production supplies, and factory overhead. Product cost can also be considered the cost of the labor required to deliver a service to a customer.
. Identify the manufacturing costs involved in producing your product and classify each cost as direct materials, direct labor, or manufacturing overhead.
I would identify Surlean Foods, as direct materials because they are the traceable matter used in manufacturing a product,Surlean Foods being one of the largest cow and bull slaughter facilities in Texas, Ken Leonard was looking ahead to controlled, pasture-to-table meat products.
. Discuss the most appropriate method for allocating the manufacturing overhead. How would different allocation methods affect the bottom line for your division?
The most appropriate method I would say is:
1. Add up the total manufacturing overhead costs.
1. Choose an allocation base. An allocation base is a measure of activity that is used to assign.
1. Â Review payroll or maintenance records to determine the total of the allocation base generated.
1. Review payroll or maintenance records to determine the total of the allocation base generated.
1. Monitor production to determine the quantity of the allocation base that is to be assigned to each unit of production.
Different methods would affect differently based on the increases in manufacturing overhead costs. For example, when manufacturing equipment is kept running for an extra shift, the electric bill increases. This is an example of how machine hours drive electricity costs. (Podraza).
References
Surlean Foods - Company History. (n.d.). Retrieved October 16, 2017, from http://www.surleanfoods.net/surlean-foods-on-your-team/company-history/
How to Calculate Allocated Manufacturing Overhead. (n.d.). Retrieved October 16, 2017, from http://smallbusiness.chron.com/calculate-allocated-manufacturing-overhead-22425.html