Cornelius Company produces women’s clothing. During the year, the company incurred the following costs: Factory rent $ 396,500 Direct labor 333,000 Utilities—factory 42,400 Purchases of direct materials 582,500 Indirect materials 75,350 Indirect labor 66,600 Inventories for the year were as follows: January 1 December 31 Materials $ 30,500 $ 48,250 Work-in-Process 47,750 42,200 Finished Goods 146,000 81,050 Required: 1&2. Prepare a statement of cost of goods manufactured and calculate cost of goods sold.
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.
Cornelius Company produces women’s clothing. During the year, the company incurred the following costs:
| Factory rent | $ | 396,500 | |
| Direct labor | 333,000 | ||
| Utilities—factory | 42,400 | ||
| Purchases of direct materials | 582,500 | ||
| Indirect materials | 75,350 | ||
| Indirect labor | 66,600 | ||
Inventories for the year were as follows:
| January 1 | December 31 | |||||
| Materials | $ | 30,500 | $ | 48,250 | ||
| Work-in-Process | 47,750 | 42,200 | ||||
| Finished Goods | 146,000 | 81,050 | ||||
Required:
1&2. Prepare a statement of cost of goods manufactured and calculate cost of goods sold.
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