Happy Trails has the following information for its manufacturing: Direct Materials $16 Direct Labor $16 Variable Manufacturing Overhead $3 Fixed Manufacturing Overhead $25 Units Produced 27,000 Units Sold 18,000 Its income statement under absorption costing is: Sales $1,901,000 Beginning Inventory $0 Cost of Goods Manufactured 1,620,000 Cost of Goods Available for Sale $1,620,000 - Ending Inventory 540,000 Cost of Goods Sold $1,080,000 Gross Profit $821,000 -Sales and Admin. Expenses: Variable $108,000 Fixed 200,000 Total Sales and Admin. Expenses $308,000 Net Operating Income $513,000 Prepare an income statement with variable costing and a reconciliation statement between both methods. If an amount box does not require an entry, leave i
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.
Happy Trails has the following information for its manufacturing:
| Direct Materials | $16 |
| Direct Labor | $16 |
| Variable Manufacturing |
$3 |
| Fixed Manufacturing Overhead | $25 |
| Units Produced | 27,000 |
| Units Sold | 18,000 |
Its income statement under absorption costing is:
| Sales | $1,901,000 |
| Beginning Inventory | $0 |
| Cost of Goods Manufactured | 1,620,000 |
| Cost of Goods Available for Sale | $1,620,000 |
| - Ending Inventory | 540,000 |
| Cost of Goods Sold | $1,080,000 |
| Gross Profit | $821,000 |
| -Sales and Admin. Expenses: | |
| Variable | $108,000 |
| Fixed | 200,000 |
| Total Sales and Admin. Expenses | $308,000 |
| Net Operating Income | $513,000 |
Prepare an income statement with variable costing and a
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