Wolsey Industries Inc. expects to maintain the same inventories at the end of 2016 as at the beginning of the year. The total of all production costs for the year is therefore assumed to be equal to the cost of goods sold. With this in mind, the various department heads were asked to submit estimates of the costs for their departments during the year. A summary report of these estimates is as follows: Production costs: Direct materials..... Direct labor.... Factory overhead. Selling expenses: Estimated Fixed Cost $200,000 Estimated Variable Cost (per unit sold) $ 46 40 20
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.
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The question is based on the concept of Cost Accounting.
Income Statement: It is a part of the Financial Statements which shows the profit earned or loss incurred by an entity during a particular period from it operations.
Contribution margin ratio: Contribution margin is the difference between the sales and the variable cost. Contribution Margin Ratio is calculated by dividing the contribution by the total sales.
Break even sales: It is the level of sales at which there would be no profit and no loss. Also the contribution becomes equal to the fixed cost.
As per the Bartleby guidelines we are allowed to answer only the first three sub-parts in case of multiple sub-parts.
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