Total Cost of Production for One Month:
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.
Please create an example of an income statement for this business:
Total Cost of Production for One Month:
Fixed Costs:
|
Warehouse Space Rent |
$600.00 |
|
Wages |
$1800.00 |
|
Utilities (Water, Electricity, Gas) |
$700.00 |
|
Loan Repayment |
$800.00 |
|
Total |
$3900.00 |
Variable Costs:
|
Ingredients: Fruits, Sweetener, Spices |
$1200.00 |
|
Plastic Bottles (1000) |
$900.00 |
|
Labels (1000) |
$300.00 |
|
Total |
$2400.00 |
Total Quantity Produced: 1000 Juice Bottles/ 500 Liters
Time Period : One Month.
Total Production Cost for One Month Period= Fixed Cost + Variable Costs
= $3900.00+$2400.00
=$6300.00
Total Production Costs equates to $6300.00.
Therefore Tropical Sips incurs a total of $6300.00 ec dollars for one month when 500 liters or 1000 500ml juice bottles are produced.
At an introductory price of $7.00 each a total revenue of $7000.00 is generated.
=1000 *$7.00= $7000.00
Thus at an introductory price of $7.00, a profit of $700.00 is generated.
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