Classify production costs
See this course’s project requirements
A two-product costing and constrained-capacity model with contribution, overhead, bottleneck minutes and a demand-limited production recommendation.
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What to include
- A cost-classification and unit-cost schedule.
- A contribution schedule and two-product profit bridge.
- An overhead-rate and applied-versus-actual reconciliation.
- A capacity feasibility and contribution-per-minute table.
- A checked feasible product mix with an explicit tie and resource ledger.
- A price/capacity sensitivity and conditional product-mix recommendation.
Review and revise
Use these criteria to check your work and choose what to improve.
- Costs: behavior, units and overhead assignment are explicit.
- Feasibility: time/demand/whole-unit constraints hold.
- Objective: contribution and fixed-pool profit reconcile.
- Decision: ties and changed-price/capacity scenarios are checked.
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The idea in everyday life
Original fictional practice. All money is USD. No account, payment, personal record or outside participation is required. Fictional workshop sells whole units only. Product A: price 30, variable material 12, variable labor 6, bottleneck 6 min, demand cap 50. Product B: price 24, material 8, labor 4, bottleneck 4 min, demand cap 80. Available bottleneck time 600 min. Monthly fixed manufacturing overhead 600, budget activity 600 min (rate 1/min). All produced units sell within demand limits; no inventory, other constraints or taxes in this bounded model.
Cost behavior and traceability answer different questions.
Classify production costs — complete worked case
Cost behavior and traceability answer different questions.
Fictional workshop sells whole units only. Product A: price 30, variable material 12, variable labor 6, bottleneck 6 min, demand cap 50. Product B: price 24, material 8, labor 4, bottleneck 4 min, demand cap 80. Available bottleneck time 600 min. Monthly fixed manufacturing overhead 600, budget activity 600 min (rate 1/min). All produced units sell within demand limits; no inventory, other constraints or taxes in this bounded model.
Two products
Paste at A1.
| AProduct | BPrice | CMaterial | DVariable labor | EMachine min | FMax demand |
|---|---|---|---|---|---|
| A | 30 | 12 | 6 | 6 | 50 |
| B | 24 | 8 | 4 | 4 | 80 |
Copy as plain text
1. 1.1 Classify
Label each supplied cost’s unit and behavior; retain monthly overhead as a period pool.
You should see: A material/labor are per-unit; overhead is monthly 600.
2. 1.2 Classify
Calculate variable unit totals without dividing overhead by one arbitrary product quantity.
You should see: A18, B12.
3. 1.3 Classify
Mark direct versus pooled costs in a separate column and avoid treating those labels as synonyms for behavior.
You should see: Traceability and volume response are separate.
4. 1.4 Classify
If B material rises to 9, change only B variable cost and preserve the fixed pool.
You should see: B variable cost 13; overhead 600 unchanged.
What to finish
A cost-classification and unit-cost schedule.
Watch for this
Subtracting 600 of monthly overhead from every unit’s price.
How can I tell I understand it?
Verify that your completed cost-classification and unit-cost schedule meets the three lesson-specific checks and retains the supporting original records.
Quick knowledge check
Answer all 3 questions. Get at least 2 right and the lesson completes automatically.
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Pass the check. We’ll save the progress.
Answer all 3 questions above and get at least 2 right. You can review the explanations and try again.
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Sources and further reading
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Source & access notes · checked 2026-10-01
Read cost behavior and unit/total contribution formulas. Original two-product case replaces all published examples.
Access: Public primary page body opened and relevant sections read through the web reader on 2026-10-01; no account required for reading.
Reuse: Original Life Starter cases, datasets and questions; no source exercise or worked dataset reproduced. Links support further reading.
Source & access notes · checked 2026-10-01
Read estimated pool/activity rate and application versus actual overhead; no source activities copied.
Access: Public primary page body opened and relevant sections read through the web reader on 2026-10-01; no account required for reading.
Reuse: Original Life Starter cases, datasets and questions; no source exercise or worked dataset reproduced. Links support further reading.
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