ld be tied together through a universal numerical bill of material and a matrix type part numbering and activity coding system.Time Use of FacilitiesThe primary objectives of the cost system are to provide management with a reliable tool for measuring and managing the performance of the manufacturing and distribution operations. The actual cost of a product as compared to pre-manufactured costs estimates and market process is also determined. Another objective is to provide information for designers who design to cost and apply value-engineering principles in product development.The time use of facilities corrects variable product valuation problem. It offers a better basis for allocating the actual accrued cost share of facilities, burden, overhead, and direct expenses to the product. The time use of labor, machine, and plant facilities provides a measurable and definable cost standard for each operation. These costs can be accrued into the products inventory valuation on the basis of operation time. The time use of facilities and how it fits into he use rate calculation will no be explained. A use rate is calculated for each workstation. It includes all indirect, burden, and overhead costs, which are attributable to the workstation. It is charged to the product and operation just for the time used during the operation and is based on the standard annual hours of use of the workstation. The time use of facilities sue rate defines the impact of schedule or performance base under or over utilization of the facility. This is a variance and is an adjustment to profit. It adds charges to the labor cost for work cycle time of labor operation and total operation cost is added to the material cost to compute level by level inventory valuation at each step.Level by Level Total AbsorptionThis is the complete allocation of indirect expenses to the product based on the bucket concept. This is the costed WIP inventory of each item attached with all...
