Calculation of Estimated Material and Hour Cost in Repetitive Manufacturing

Part of the production for schedule line 1 takes place in the cost document interval, 30 units are produced in three shifts. The material and labor costs estimates are calculated, based on standard cost of the produced item.

The estimated costs for schedule line 1 are based only on actual produced quantity that falls in the cost document interval, because all production for schedule line 1 was completed before the calculation date.

Part of the production for schedule line 2 falls in the cost document interval, but production will continue after the cost document interval end. The calculation is performed while a shift is in progress. In the figure, one shift is completed and 2 units reported complete on an active shift before the calculation date. Based on the 12 units completed, the amount of materials and labor cost is estimated, using standard cost as the basis.

The above calculations account for the estimates based on the actual produced quantity. The expected production for the remaining shifts is calculated from the remaining available production hours and the production rate of the used production model.

The expected quantity of future production is 18 units. This quantity is used to calculate estimated costs based on expected production.

The total cost estimated for schedule line 2 is the sum of estimated cost based on actual production and the expected production.