Gower, Inc., a manufacturer of plastic products, reports the following manufacturing costs and account analysis classification for the year ended December 31, 2017. Classification All variable Account Amount Direct materials Direct manufacturing labor Power $300,000 225,000 37,500 56,250 All variable All variable Supervision labor Materials-handing latbor Maintenance labor Depreciation Rent, property taxes, and administration 20% variable 50% variable 60,000 75,000 95,000 100,000 40% variable 0% variable 0% variable Gower, Inc., produced 75,000 units of product in 2017. Gower's management is estimating costs for 2018 on the basis of 2017 numbers. The following additional information is available for 2018. a. Direct materials prices in 2018 are expected to increase by 5% compared with 2017. b. Under the terms of the labor contract, direct manufacturing labor wage rates are expected to increase by 10% in 2018 compared with 2017. c. Power rates and wage rates for supervision, materials handling, and maintenance are not expected to change from 2017 to 2018. d. Depreciation costs are expected to increase by 5%, and rent, property taxes, and administration costs are expected to increase by 7%. e. Gower expects to manufacture and sell 80,000 units in 2018.
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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