Tom Corporation incurred the following costs while manufacturing its product. Materials used in production P120,000 Advertising expense P45,000 Depreciation on plant 60,000 Property taxes on plant 19,000 Property taxes on store 7,500 Delivery expense 21,000 Labor costs of assembly-line workers 110,000 Sales commissions 35,000 Factory supplies used 25,000 Salaries paid to sales clerks 50,000 Work-in-process inventory was P10,000 at January 1 and P14,000 at December 31. Finished goods inventory was P60,500 at January 1 and P50,600 at December 31. Note: Assume all materials were direct. Requirement: Using the given information, compute for: Cost of goods manufactured Cost of goods sold
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.
Tom Corporation
Tom Corporation incurred the following costs while manufacturing its product.
|
Materials used in production |
P120,000 |
Advertising expense |
P45,000 |
|
|
60,000 |
Property taxes on plant |
19,000 |
|
Property taxes on store |
7,500 |
Delivery expense |
21,000 |
|
Labor costs of assembly-line workers |
110,000 |
Sales commissions |
35,000 |
|
Factory supplies used |
25,000 |
Salaries paid to sales clerks |
50,000 |
Work-in-process inventory was P10,000 at January 1 and P14,000 at December 31. Finished goods inventory was P60,500 at January 1 and P50,600 at December 31. Note: Assume all materials were direct.
Requirement: Using the given information, compute for:
- Cost of goods
manufactured - Cost of goods sold
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