In process costing, the process is analyzed first and then a unit measure is computed in the form of equivalent units for direct materials, direct labor, overhead, and all three combined. The same analysis applies to both manufacturing and service processes.

Required
Visit your local U.S. Mail center. Look into the back room, and you will see several ongoing processes. Select one process, such as sorting, and list the costs associated with this process. Your list should include materials, labor, and overhead; be specific. Classify each cost as fixed or variable. At the bottom of your list, outline how overhead should be assigned to your identified process. The following format (with an example) issuggested.

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Variable Fixed Material Labor Overhead Cost Cost Direct Direct Cost Description Manual sorting.. Overhead allocation suggestions