(a) Prepare an answer sheet with the following column headings. Cost Items Direct Material Direct Labor Manufacturing Period Costs Overhead Assuming that Ibri Company manufactures, on average, 1,000 stereo systems per month, enter each cost item on your answer sheet, placing the dollar amount per month under the appropriate headings. Total the dollar amounts in each of the columns. (b) Compute the cost to produce one stereo system.
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
![6.
Ibri Company, a manufacturer of stereo systems, started its
production in January 2018. For the preceding 3 years had been a
retailer of stereo systems. After a thorough survey of stereo system
markets, Ibri Company decided to turn its retail store into a stereo
equipment factory. Raw materials cost for a stereo system will total
$77 per unit. Workers on the production lines are on average paid
$11 per hour. A stereo system usually takes 4 hours to complete. In
addition, the rent on the equipment used to assemble stereo systems
amounts to $5,200 per month. Indirect materials cost $5 per system.
A supervisor was hired to oversee production; her monthly salary is
$3,000. Factory janitorial costs are $1,000 monthly. Advertising
costs for the stereo system will be $5,000 per month. The factory
building depreciation expense is $8,400 per year. Property taxes on
the factory building will be $12,000 per year.
Instructions
(a) Prepare an answer sheet with the following column headings.
Cost Items Direct Material Direct Labor Manufacturing Period Costs
Overhead
Assuming that Ibri Company manufactures, on average, 1,000
stereo systems per month, enter each cost item on your answer
sheet, placing the dollar amount per month under the
appropriate headings. Total the dollar amounts in each of the
columns.
(b) Compute the cost to produce one stereo system.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F141aa6b9-bf27-4b69-9cc3-11b5bac5a641%2F6224129b-c68b-441f-a772-df3dc8c9dbb3%2F2s3z2r9_processed.jpeg&w=3840&q=75)
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