Morrisey & Brown, Ltd. Income Statement For the Month Ended September 30 Sales Variable expenses: 500,000 Cost of goods sold 300,000 Salaries and commissions expense Shipping expense 300,000 Contribution margin Fixed expenses: Advertising expense 21,000 Depreciation expense 15,000 Insurance expense 6,000 Salaries and commissions expense Shipping expense 42,000 Net operating income 30,000 %24
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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Morrisey & Brown, Ltd., of Sydney is a merchandising company that is the sole distributor of a product that is increasing in popularity among Australian consumers. The company’s income statements for the three most recent months follow: |
| Morrisey & Brown, Ltd. Income Statements For the Three Months Ended September 30 |
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| July | August | September | |||||||
| Sales in units | 4,000 | 4,500 | 5,000 | ||||||
| Sales | $400,000 | $450,000 | $500,000 | ||||||
| Cost of goods sold |
240,000 |
270,000 | 300,000 | ||||||
| Gross margin | 160,000 | 180,000 | 200,000 | ||||||
| Selling and administrative expenses: | |||||||||
| Advertising expense | 21,000 | 21,000 | 21,000 | ||||||
| Shipping expense | 34,000 | 36,000 | 38,000 | ||||||
| Salaries and commissions | 78,000 | 84,000 | 90,000 | ||||||
| Insurance expense | 6,000 | 6,000 | 6,000 | ||||||
| |
15,000 | 15,000 | 15,000 | ||||||
| Total selling and administrative expenses | 154,000 | 162,000 | 170,000 | ||||||
| Net operating income | $ 6,000 | $ 18,000 | $ 30,000 | ||||||
Redo the company’s income statement at the 5,000-unit level of activity using the contribution format.
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