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Figure 3-9. The following cost formula was developed using monthly data for a retail clothing store.
Total cost = $75,620 + ($242 ´ number of customers)
Refer to Figure 3-9.The term $75,620
Manufacturing Overhead
Includes all the indirect costs associated with the production process, excluding direct materials and direct labor.
Assembly Division
A department or area within a manufacturing firm that is responsible for assembling the components of a product into a finished good.
Prorated
The allocation or division of amounts or costs proportionally according to a specific rate, size, or timeframe.
WIP
An acronym for Work In Progress, which refers to the materials and products that are in the process of being manufactured but are not yet complete.
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