The cost object can be a brand, project, product line, division/department, or a branch of the company. The company should also determine the cost allocation base, which is the basis that it uses to allocate the costs to cost objects. One of the most common uses of cost allocation is distributing overhead expenses such as …

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The calculation of a product’s cost involves threecomponents—direct materials, direct labor, and manufacturingoverhead. Assume direct materials cost $1,000 for one unit of theBasic sailboat and $1,300 for the Deluxe. Direct labor costs are$600 for one unit of the Basic sailboat and $750 for the Deluxe.This information, combined with the overhead cost per unit, givesus what …

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