Sales .. $4,500,000 Manufacturing costs: Direct materials.. $ 960,000 Direct labor 2,000,000 520,000 Variable manufacturing cost Fixed manufacturing cost . Selling and administrative expenses: Variable .. 120,000 3,600,000 $ 72,000 80,000 Fixed. 152,000 Sales .. $4,500,000 Manufacturing costs: Direct materials.. $ 960,000 Direct labor 2,000,000 520,000 Variable manufacturing cost Fixed manufacturing cost . Selling and administrative expenses: Variable .. 120,000 3,600,000 $ 72,000 80,000 Fixed. 152,000
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.
During the first month of operations ended May 31, Big Sky Creations Company
produced 40,000 designer cowboy boots, of which 36,000 were sold. Operating data for
the month are summarized as follows:
During June, Big Sky Creations produced 32,000 designer cowboy boots and sold
36,000 cowboy boots. Operating data for June are summarized as follows:
1. Using the absorption costing concept, prepare income statements for (a) May and
(b) June.
2. Using the variable costing concept, prepare income statements for (a) May and (b)
June.
3. a. Explain the reason for the differences in operating income in (1) and (2) for
May.
b. Explain the reason for the differences in operating income in (1) and (2) for June.
4. Based on your answers to (1) and (2), did Big Sky Creations Company operate more
profitably in May or in June? Explain
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