In its first year of operations, a company produced 10,000 units and sold 8,000 units of its product. In its second year, the ca units and sold 10,000 units. For this product: Per Unit Per Year Selling price Direct materials $200 $ 71 $ 50 $ 9 $ 8 Direct labor Variable manufacturing overhead Sales commission Fixed manufacturing overhead $300,000 Using absorption costing, what is the cost of goods sold the company would report for the second year of operations?
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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In its first year of operations, a company produced 10,000 units and sold 8,000 units of its product. In its second year, the company produced 8,000
units and sold 10,000 units. For this product:
Per Unit
Per Year
Selling price
Direct materials
$200
$ 71
$ 50
$ 9
Direct labor
Variable manufacturing overhead
Sales commission
$ 8
Fixed manufacturing overhead
$300,000
Using absorption costing, what is the cost of goods sold the company would report for the second year of operations?
Multiple Choice
$1,390,000
$1,675,000
$1,660,000
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