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Dec 30, 2018 at 08:40 AM

Product costing based on different component prices

105 Views Last edit Jan 02, 2019 at 07:08 AM 2 rev

Dear Experts,

Recently in a manufacturing plant, we are obligated to change our processes as follow:

We are a subsidiary company in a holding. Recently the procurement policy of the holding company has changed and a bunch of raw materials would be procured by the holding and will be given us free of charge (in the possession of the parent company). On the other hand, some of these materials maybe procured by our company (will be paid by the child company).

So from the costing viewpoint, we will have different product costs based on the components’ provision.

Is there any practice to calculate the cost of semi-finished and finished products?