Process Manufacturing - EBS (MOSC)

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Cost Allocation in OPM

edited Jun 2, 2015 10:01AM in Process Manufacturing - EBS (MOSC) 3 commentsAnswered

CASE STUDY

Suppose we have a balance of USD 10,000 in an account that is assigned to 2 different products, namely EBS and JD.

NO. OF UNITS PRODUCED IN THE PERIOD (Suppose no prior period stock or prior period cost allocation exist and this is the very first time that GL Expense Allocation will be used)

EBS: 1 Batch of 100 units

JD: 1 Batch of 250 units

How the amount will be allocated to the products?

METHOD "A"

10,000/2 products = 5,000 per product

5,000/Units of EBS = 5000/100 = USD 50 per unit of EBS

5,000/Units of JD = 5000/250 = USD 20 per unit of JD

METHOD "B"

10,000/(Units of EBS+JD) = 10000/(100+250) = 10000/350 = USD 28.57 per unit for each of EBS and JD

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