Brody Company makes industrial cleaning solvents. Various chemicals, detergent, and waterare mixed together and then bottled in 10-gallon drums. Brody provided the followinginformation for last year: Raw materials purchases $250,000Direct labor 140,000Depreciation on factory equipment 45,000Depreciation on factory building 30,000Depreciation on headquarters building 50,000Factory insurance 15,000Property taxes: Factory 20,000Headquarters 18,000 Utilities for factory 34,000Utilities for sales office 1,800Administrative salaries 150,000Indirect labor salaries 156,000Sales office salaries 90,000Beginning balance, Raw Materials 124,000Beginning balance, WIP 124,000Beginning balance, Finished Goods 84,000Ending balance, Raw Materials 102,000Ending balance, WIP 130,000Ending balance, Finished Goods 82,000Last year, Brody completed 100,000 units. Sales revenue equaled $1,200,000, and Brody paid asales commission of 5 percent of sales.Required:1. Calculate the direct materials used in production for last year. 2. Calculate total prime cost.3. Calculate total conversion cost.4. Prepare a cost of goods manufactured statement for last year. Calculate the unit product cost.5. Prepare a cost of goods sold statement for last year.6. Prepare an income statement for last year. Show the percentage of sales that each line itemrepresents
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.
Brody Company makes industrial cleaning solvents. Various chemicals, detergent, and water
are mixed together and then bottled in 10-gallon drums. Brody provided the following
information for last year:
Raw materials purchases $250,000
Direct labor 140,000
Depreciation on factory equipment 45,000
Depreciation on factory building 30,000
Depreciation on headquarters building 50,000
Factory insurance 15,000
Property taxes:
Factory 20,000
Headquarters 18,000
Utilities for factory 34,000
Utilities for sales office 1,800
Administrative salaries 150,000
Indirect labor salaries 156,000
Sales office salaries 90,000
Beginning balance, Raw Materials 124,000
Beginning balance, WIP 124,000
Beginning balance, Finished Goods 84,000
Ending balance, Raw Materials 102,000
Ending balance, WIP 130,000
Ending balance, Finished Goods 82,000
Last year, Brody completed 100,000 units. Sales revenue equaled $1,200,000, and Brody paid a
sales commission of 5 percent of sales.
Required:
1. Calculate the direct materials used in production for last year.
2. Calculate total prime cost.
3. Calculate total conversion cost.
4. Prepare a cost of goods manufactured statement for last year. Calculate the unit product cost.
5. Prepare a cost of goods sold statement for last year.
6. Prepare an income statement for last year. Show the percentage of sales that each line item
represents
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