On August 1, Cairle Company's work-in-process inventory consisted of three jobs with the following costs: Job 70 Job 71 Job 72 Direct materials $1,700 $2,000 $850 Direct labor 1,900 1,300 900 Applied overhead 1,520 1,040 720 During August, four more jobs were started. Information on costs added to the seven jobs during the month is as follows: Job 70 Job 71 Job 72 Job 73 Job 74 Job 75 Job 76 Direct materials $800 $1,235 $3,600 $5,000 $300 $560 $80 Direct labor 1,000 1,400 2,200 1,800 600 850 170 Before the end of August, Jobs 70, 72, 73, and 75 were completed. On August 31, Jobs 72 and 75 were sold. Cairle's selling and administrative expenses for August were $1,300. Assume that Cairle prices its jobs at cost plus 15 percent. Required: Prepare an income statement for Cairle Company for August. Cairle Company Income Statement For the Month of August Cost of goods sold Gross
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.
On August 1, Cairle Company's work-in-process inventory consisted of three jobs with the following costs:
|
Job 70 |
Job 71 |
Job 72 |
|
|
Direct materials |
$1,700 |
$2,000 |
$850 |
|
Direct labor |
1,900 |
1,300 |
900 |
|
Applied |
1,520 |
1,040 |
720 |
During August, four more jobs were started. Information on costs added to the seven jobs during the month is as follows:
|
Job 70 |
Job 71 |
Job 72 |
Job 73 |
Job 74 |
Job 75 |
Job 76 |
|
|
Direct materials |
$800 |
$1,235 |
$3,600 |
$5,000 |
$300 |
$560 |
$80 |
|
Direct labor |
1,000 |
1,400 |
2,200 |
1,800 |
600 |
850 |
170 |
Before the end of August, Jobs 70, 72, 73, and 75 were completed. On August 31, Jobs 72 and 75 were sold.
Cairle's selling and administrative expenses for August were $1,300. Assume that Cairle prices its jobs at cost plus 15 percent.
Required:
Prepare an income statement for Cairle Company for August.
|
Cairle Company |
|
|
Cost of goods sold Gross margin Operating income Sales Selling and administrative expenses Sales |
$Sales |
|
Cost of goods sold Gross margin Operating income Sales Selling and administrative expenses Cost of goods sold |
Cost of goods sold |
|
Cost of goods sold Gross margin Operating income Sales Selling and administrative expenses Gross margin |
$Gross margin |
|
Cost of goods sold Gross margin Operating income Sales Selling and administrative expenses Selling and administrative expenses |
Selling and administrative expenses |
|
Operating income Operating loss Operating income |
$Operating income |
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