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  3. the (m) signifies a manufactured part. the (p) sig

The (M) signifies a manufactured part. The (P) signifies a purchased part. The cost of...

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Accounting

The (M) signifies a manufactured part. The (P) signifies a purchased part. The cost of level 9 parts are assembled to make level 8 cost. The level 8 costs are combined to make level 7. Levels 7 and 8 are manufactured parts. This is referred to as rolling the cost. You always start at the bottom and develop your cost to level 0. Once you reach level 0 costing for this product is complete.

Widget-Product Structure

Level Source Quantity Part Number Material Labor Overhead Total

0 M 1 01

1 M 1 A1

2 P 1 A2

2 P 1 A3

1 M 1 B1

2 P 1 B2

2 P 2 B3

1 M 1 C1

2 P 1 C2

2 P 2 C3

Part Number Unit Cost

A2 .35

A3 .40

B2 .20

B3 .30

C2 .15

C3 .25

Labor rate per hour is $15.00.

Assembly time from industrial engineering is .012 hours per assembly.

Factory overhead rate is 150% of labor cost.

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