PROBLEM 1- Speed Corporation produces and sells a single product, a wooden hand loom for weaving small items such as scarves. Selected cost and operating data relating to the product for two years are given below: Selling price per unit Manufacturing costs: Variable per unit produced: Direct materials Direct labor Variable overhead Fixed per year Selling and administrative costs: Variable per unit sold Fixed per year Units in beginning inventory Units produced during the year Units sold during the year Units in ending inventory P50 P11 P 6 P 3 P120,000 P 4 P70,000 Year 1 0 10,000 8,000 2,000 Required: 1. Assume the company uses absorption costing. a. Compute the unit product cost in each year. b. Prepare an income statement for each year. 2. Assume the company uses variable costing. Year 2 2,000 6,000 8,000 0 a. Compute the unit product cost in each year. b. Prepare an income statement for each year. 3. Reconcile the variable costing and absorption costing net operating incomes.
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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