Solid Enterprises produces 2 models of computer tables: Executive and Office. Both models undergo identical assembly operations, the difference is in the quality of the materials used. The following data are available for July: Executive Office Total Number assembled 1,200 1,800 3,000 Materials per table $1,000 $550 Direct Labor $1,500,000 Factory Utilities 450,000 Other overhead 1,350,000 Total $3,300,000 Solid uses the operations costing and assigns conversion costs based on the number of units produced. Regular selling price of each is $3,000 for the Executive table and $2,200 for the Office table. A gross profit rate of 30 % is considered adequate by the company financial officer. Required: a) Compute for the cost of each unit of model and the total cost of goods manufactured. b) Is the REQUIRED GPR rate achievable for each model?
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.
Solid Enterprises produces 2 models of computer tables: Executive and Office. Both models undergo identical assembly operations, the difference is in the quality of the materials used. The following data are available for July:
|
|
Executive |
Office |
Total |
|
Number assembled |
1,200 |
1,800 |
3,000 |
|
Materials per table |
$1,000 |
$550 |
|
|
Direct Labor |
|
|
$1,500,000 |
|
Factory Utilities |
|
|
450,000 |
|
Other |
|
|
1,350,000 |
|
Total |
|
|
$3,300,000 |
Solid uses the operations costing and assigns conversion costs based on the number of units produced. Regular selling price of each is $3,000 for the Executive table and $2,200 for the Office table. A gross profit rate of 30 % is considered adequate by the company financial officer.
Required: a) Compute for the cost of each unit of model and the total cost of goods
manufactured.
- b) Is the REQUIRED GPR rate achievable for each model?
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