Biscayne Industries has determined the cost of manufacturing a unit of product as follows, based on normal production of 100,000 units per year: Direct materials……………………………………….. $5 Direct labor…...……………………………………….. $4 Variable factory overhead……………………………..$3 Fixed factory overhead………………………………...$3 Total cost…………………………………………………$15 March April Units produced……………… 12,000 8,000 Units sold……………………. 8,000 12,000 Selling and administrative Expenses (all fixed).............. $12,000 $12,000 The selling price is $20 per unit. There were no inventories on March 1, and there is no work in process on April 30. Required: Prepare comparative income statements for each month under each of the following: Absorption costing (include under or overapplied fixed overhead). Variable costing
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.
Biscayne Industries has determined the cost of manufacturing a unit of product as follows, based on normal production of 100,000 units per year:
Direct materials……………………………………….. $5
Direct labor…...……………………………………….. $4
Variable factory
Fixed factory overhead………………………………...$3
Total cost…………………………………………………$15
March April
Units produced……………… 12,000 8,000
Units sold……………………. 8,000 12,000
Selling and administrative
Expenses (all fixed).............. $12,000 $12,000
The selling price is $20 per unit. There were no inventories on March 1, and there is no work in process on April 30.
Required:
Prepare comparative income statements for each month under each of the following:
-
Absorption costing (include under or overapplied fixed overhead).
-
Variable costing
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