Sims Company, a manufacturer of tablet computers, began operations on January 1, 2019. Its cost and sales Information for this year follows. Manufacturing costs Direct materials 40 per unit 60 per unit Direct labor Overhead costs Variable Fixed Selling and administrative costs for the year Variable 20 per unit $8,800,000 (per year) $ 750,000 $4,250,000 Fixed Production and sales for the year Units produced Units sold Sales price per unit 110,000 units 80,000 units 360 per unit 1. Prepare an Income statement for the year using varlable costing. 2. Prepare an Income statement for the year using absorption costing.
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.
1. Prepare an income statement for the year using variable costing.
1B. Prepare an income statement for the year using absorption costing.
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