In a cost sheet, how is the total cost of production calculated?

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Q: In a cost sheet, how is the total cost of production calculated?

Solution: The total cost of production is calculated by summing direct materials, direct labor, and manufacturing overhead.

Steps: 8

Step 1: Identify the direct materials used in production. This includes all raw materials that are directly part of the product.
Step 2: Calculate the total cost of direct materials. This is done by adding up the costs of all the direct materials identified in Step 1.
Step 3: Identify the direct labor costs. This includes wages paid to workers who are directly involved in making the product.
Step 4: Calculate the total cost of direct labor. This is done by adding up all the wages paid to the direct labor workers.
Step 5: Identify the manufacturing overhead costs. This includes all indirect costs related to production, such as utilities, rent, and equipment depreciation.
Step 6: Calculate the total manufacturing overhead costs by summing all the identified overhead costs.
Step 7: Add the total cost of direct materials (from Step 2), total cost of direct labor (from Step 4), and total manufacturing overhead (from Step 6) together.
Step 8: The result from Step 7 is the total cost of production.