Maryville Inc. incurred the following costs during August: Raw materials used $ 33,100 Direct labor 65,200 Manufacturing overhead, actual 44,800 Selling expenses 26,700 Administrative expenses 19,400 Interest expense 9,100
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.
Maryville Inc. incurred the following costs during August:
| Raw materials used | $ | 33,100 | |
| Direct labor | 65,200 | ||
| Manufacturing |
44,800 | ||
| Selling expenses | 26,700 | ||
| Administrative expenses | 19,400 | ||
| Interest expense | 9,100 | ||
During the month, 5,300 units of product were manufactured and 4,800 units of product were sold. On August 1, Maryville carried no inventories. On August 31, there were no inventories other than finished goods.
Required:
- Calculate the cost of goods manufactured during August and the average cost per unit of product manufactured.
- Calculate the cost of goods sold during August.
- Calculate the difference between cost of goods
manufactured and cost of goods sold. How will this amount be reported in the financial statements? - Prepare a traditional (absorption) income statement for Maryville for the month of August. Assume that sales for the month were $244,800 and the company’s effective income tax rate was 30%.
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