how to calculate man hours for production excel template

For small businesses, activity-based costing is great for making overhead decisions and pricing products.Because activity-based costing breaks down the costs that go into creating a product, it has many uses in business.Relevance and Uses of Activity Based Costing Formula

By computing and using this method of activity-based costing the manufacturing company can successfully and more accurately determine the various product cost and hence can have a detailed cost analysis report. The activity-based formula simply gives us the dollar value of amount per activity which is then can be multiplied to determine the cost of the total products assigned or produced in that particular cost pool. Overhead Rate = $8 per working hour Explanation Calculate the overhead applicable rate for that year using ABC Formula. The utility cost is directly mapped to direct labor working hours which is totaling to 5,000 hours per year in 2007-2008. The total estimated product set-up expenditure is 40,000 for the year 2007-2008. Now wants to figure and calculate it’s expenditure on utilities for a particular period. Overhead Rate is calculated using Activity Based Costing formulaĪctivity Based Costing = Cost Pool Total / Cost Driver The utility cost is directly mapped to direct labor working hours which is totaling to 1,000 hours per year in 2008-2009. The total estimated utility expenditure is 20,000 for the year 2008-2009.

How to calculate man hours for production excel template