Denton Company manufactures and sells a single product. Cost data for the product are given: Variable costs per unit: Direct materials Direct labor Variable manufacturing overhead Variable selling and administrative Total variable cost per unit Fixed costs per month: Fixed manufacturing overhead Fixed selling and administrative Total fixed cost per month July August The product sells for $49 per unit. Production and sales data for July and August, the first two months of operations, follow: Units Produced 21,000 21,000 Sales Cost of goods sold Gross margin Selling and administrative expenses Net operating income $5 11 2 2 $ 20 $ 63,000 169,000 $ 232,000 Required: 1. Determine the unit product cost under: a. Absorption costing. b. Variable costing. Units Sold 17,000 25,000 The company's Accounting Department has prepared the following absorption costing income statements for July and August: July August $ 833,000 $ 1,225,000 357,000 525,000 476,000 700,000 203,000 219,000 $ 273,000 $ 481,000 2. Prepare variable costing income statements for July and August. 3. Reconcile the variable costing and absorption costing net operating incomes.
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.
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