Cost Assignment Methods 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 $280,000 Direct labor 140,000 Depreciation on factory equipment 45,000 Depreciation on factory building 30,000 Depreciation on headquarters building 60,000 Factory insurance 15,000 Property taxes: Factory 20,000 Headquarters 18,000 Utilities for factory 34,000 Utilities for sales office 2,400 Administrative salaries 150,000 Indirect labor salaries 159,000 Sales office salaries 90,000 Beginning balance, raw materials 127,000 Beginning balance, work in process 124,000 Beginning balance, finished goods 84,000 Ending balance, raw materials 102,000 Ending balance, work in process 130,000 Ending balance, finished goods 79,000 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. If required, round your answer to the nearest cent. 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. When required, round the percent to four decimal places before converting to a percentage. For example, .88349 would be rounded to .8835 and entered as 88.35
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.
Cost Assignment Methods
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 | $280,000 |
| Direct labor | 140,000 |
| 45,000 | |
| Depreciation on factory building | 30,000 |
| Depreciation on headquarters building | 60,000 |
| Factory insurance | 15,000 |
| Property taxes: | |
| Factory | 20,000 |
| Headquarters | 18,000 |
| Utilities for factory | 34,000 |
| Utilities for sales office | 2,400 |
| Administrative salaries | 150,000 |
| Indirect labor salaries | 159,000 |
| Sales office salaries | 90,000 |
| Beginning balance, raw materials | 127,000 |
| Beginning balance, work in process | 124,000 |
| Beginning balance, finished goods | 84,000 |
| Ending balance, raw materials | 102,000 |
| Ending balance, work in process | 130,000 |
| Ending balance, finished goods | 79,000 |
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:
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. If required, round your answer to the nearest cent.
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. When required, round the percent to four decimal places before converting to a percentage. For example, .88349 would be rounded to .8835 and entered as 88.35.
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