Carter Furniture manufactures three models of tables: oak, cherry, and walnut. All models are assembled in the same plant and require the same assembling operations. The difference is in the cost of the wood. The following data are available for July. Oak Cherry Walnut Total Number of units 1,200 700 900 2,800 Wood costs per unit $ 80 $ 120 $ 105 Other costs: Direct labor $ 165,000 Indirect materials 26,000 Other overhead 61,000 Total $ 252,000 Carter uses operations costing and assigns conversion costs on the number of tables built. Required: Compute the cost of the each of the three models for July.
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.
Carter Furniture manufactures three models of tables: oak, cherry, and walnut. All models are assembled in the same plant and require the same assembling operations. The difference is in the cost of the wood. The following data are available for July.
| Oak | Cherry | Walnut | Total | ||||||||||||
| Number of units | 1,200 | 700 | 900 | 2,800 | |||||||||||
| Wood costs per unit | $ | 80 | $ | 120 | $ | 105 | |||||||||
| Other costs: | |||||||||||||||
| Direct labor | $ | 165,000 | |||||||||||||
| Indirect materials | 26,000 | ||||||||||||||
| Other overhead | 61,000 | ||||||||||||||
| Total | $ | 252,000 | |||||||||||||
Carter uses operations costing and assigns conversion costs on the number of tables built.
Required:
Compute the cost of the each of the three models for July.
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