Cape Cod Shirt Shop manufactures T-shirts and decorates them with custom designs for retail sale on the premises. Several costs incurred by the company are listed below. For each cost, indicate which of the following classifications best describe the cost. More than one classification may apply to the same cost item.Cost Classificationsa. Variableb. Fixedc. Periodd. Producte. Administrativef. Sellingg. Manufacturingh. Research and developmenti. Direct materialj. Direct labork. Manufacturing overheadCost Items1. Cost of fabric used in T-shirts.2. Wages of shirtmakers.3. Cost of new sign in front of retail T-shirt shop.4. Wages of the employee who repairs the firm’s sewing machines.5. Cost of electricity used in the sewing department.6. Wages of T-shirt designers and painters.7. Wages of sales personnel.8. Depreciation on sewing machines.9. Rent on the building. Part of the building’s first floor is used to make and paint T-shirts. Part of it is used for the retail sales shop. The second floor is used for administrative offices and storage of raw material and finished goods.10. Cost of daily advertisements in local media.11. Wages of designers who experiment with new fabrics, paints, and T-shirt designs.12. Cost of hiring a pilot to fly along the beach pulling a banner advertising the shop.13. Salary of the owner’s secretary.14. Cost of repairing the gas furnace.15. Cost of insurance for the production employees.
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.
Cape Cod Shirt Shop manufactures T-shirts and decorates them with custom designs for retail sale on the premises. Several costs incurred by the company are listed below. For each cost, indicate which of the following classifications best describe the cost. More than one classification may apply to the same cost item.
Cost Classifications
a. Variable
b. Fixed
c. Period
d. Product
e. Administrative
f. Selling
g. Manufacturing
h. Research and development
i. Direct material
j. Direct labor
k. Manufacturing overhead
Cost Items
1. Cost of fabric used in T-shirts.
2. Wages of shirtmakers.
3. Cost of new sign in front of retail T-shirt shop.
4. Wages of the employee who repairs the firm’s sewing machines.
5. Cost of electricity used in the sewing department.
6. Wages of T-shirt designers and painters.
7. Wages of sales personnel.
8.
9. Rent on the building. Part of the building’s first floor is used to make and paint T-shirts. Part of it is used for the retail sales shop. The second floor is used for administrative offices and storage of raw material and finished goods.
10. Cost of daily advertisements in local media.
11. Wages of designers who experiment with new fabrics, paints, and T-shirt designs.
12. Cost of hiring a pilot to fly along the beach pulling a banner advertising the shop.
13. Salary of the owner’s secretary.
14. Cost of repairing the gas furnace.
15. Cost of insurance for the production employees.
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