Wilson & Moore Industries makes artificial Christmas trees. The unit costs for producing a tree are: Direct materials $23 Direct labor $16 Variable overhead $18 Fixed overhead $5 The company also incurs $2 per tree in variable selling and administrative costs and $4,500 in fixed marketing costs. At the beginning of the year, the company had 820 trees in the beginning Finished Goods Inventory. The company produced 2,220 trees during the year. Sales totaled 1,400 trees at a price of $101 per tree. (a) Based on absorption costing, what was the company’s operating income for the year? Company’s operating income $enter the company’s operating income in dollars (b) Based on variable costing, what was the company’s operating income for the year? Company’s operating income $enter the company’s operating income in dollars (c) Assume that in the following year the company produced 2,220 trees and sold 2,870. Based on absorption costing, what was the operating income for that year? Based on variable costing, what was the operating income for that year? Absorption Costing Variable Costing Operating income $enter a dollar amount $enter a dollar amount
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.
Wilson & Moore Industries makes artificial Christmas trees. The unit costs for producing a tree are:
| Direct materials | $23 | |
| Direct labor | $16 | |
| Variable |
$18 | |
| Fixed overhead | $5 |
The company also incurs $2 per tree in variable selling and administrative costs and $4,500 in fixed marketing costs.
At the beginning of the year, the company had 820 trees in the beginning Finished Goods Inventory. The company produced 2,220 trees during the year. Sales totaled 1,400 trees at a price of $101 per tree.
(a) Based on absorption costing, what was the company’s operating income for the year?
| Company’s operating income |
$enter the company’s operating income in dollars
|
(b) Based on variable costing, what was the company’s operating income for the year?
| Company’s operating income |
$enter the company’s operating income in dollars
|
(c) Assume that in the following year the company produced 2,220 trees and sold 2,870. Based on absorption costing, what was the operating income for that year? Based on variable costing, what was the operating income for that year?
|
Absorption Costing
|
Variable Costing
|
|||
|---|---|---|---|---|
|
Operating income
|
$enter a dollar amount
|
$enter a dollar amount
|
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