Units produced and sold 84,000 Total revenues and costs Sales revenue $ 280,000 Direct materials costs 68,000 Direct labor costs 37,000 Variable manufacturing overhead 19,000 Fixed manufacturing overhead 47,000 Variable marketing and administrative costs 11,500 Fixed marketing and administrative costs 33,000 Required: a. Prepare a gross margin income statement. b. Prepare a contribution margin income statement.
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.
The following data are from the accounting records of Niles Castings for year 2.
| Units produced and sold | 84,000 | ||
| Total revenues and costs | |||
| Sales revenue | $ | 280,000 | |
| Direct materials costs | 68,000 | ||
| Direct labor costs | 37,000 | ||
| Variable manufacturing |
19,000 | ||
| Fixed manufacturing overhead | 47,000 | ||
| Variable marketing and administrative costs | 11,500 | ||
| Fixed marketing and administrative costs | 33,000 | ||
Required:
a. Prepare a gross margin income statement.
b. Prepare a contribution margin income statement.
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