Dowell Company produces a single product. Its income statements under absorption costing for its first two years of operation follow. Income Statements (Absorption Costing) Sales ($60 per unit) Cost of goods sold ($45 per unit) Gross profit Selling and administrative expenses Income Additional Information a. Sales and production data for these first two years follow Units Units produced Units sold Year 1 49,000 32,000 Direct materials Direct labor Variable overhead Year 2 49,000 66,000 Year 1 $ 1,920,000 1,440,000 480,000 338,000 $ 142,000 b. Variable costs per unit and fixed costs per year are unchanged during these years. The company's $45 per unit product cost using absorption costing consists of the following. Fixed overhead (5539,000/49,000 units) Total product cost per unit $ 12 19 3 Year 2 $ 3,960,000 2,970,000 990,000 474,000 $ 516,000 11 $.45
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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