I work for a demo/roll off company. The books were a mess before I came in. I am trying to figure out a way to assign over head costs to all jobs. The company is commercial roll off/demo company. The jobs normally only last a week. I have been trying allocate the over head by a per minute basis, because of the different types of work that we do. For example we do a switch out which takes a 120 minutes, equipment move takes 180 minutes, a final pull takes 96 minutes, and there are couple of other activities the company does. I basically took all the tickets for one month then multiplied them by how many minutes each activity would take to come up with a total minutes. I then took the P/L and divided each account by 12 to get the cost for one month. I divided that number the total number of minutes to come up with a per minute cost of over head. I only used the accounts that would be considered overhead accounts. The per minute number I am coming up with is too high. What would be a better way to figure this out since they were not job costing.
Solution :
Basically job costing is used in that industry who all work is done on job basis. Suppose, we got the order of making 10 chairs and at that time, we can calculate total job cost and each unit cost in that job by dividing the number of units in that job. In your case, I think, you got specific jobs order for this. So, need not any other method for calculating overhead cost per minute number. You did all right. I can more suggestion by knowing exact per minute number.
Solution :
Basically job costing is used in that industry who all work is done on job basis. Suppose, we got the order of making 10 chairs and at that time, we can calculate total job cost and each unit cost in that job by dividing the number of units in that job. In your case, I think, you got specific jobs order for this. So, need not any other method for calculating overhead cost per minute number. You did all right. I can more suggestion by knowing exact per minute number.
