Vintage Audio Inc. manufactures audio speakers. Each speaker requires $100 per unit of direct materials. The speaker manufacturing assembly cell includes the following estimated costs for the period: Speaker assembly cell, estimated costs: Labor $69,080 Depreciation 9,270 Supplies 3,370 Power 2,520 Total cell costs for the period $84,240 The operating plan calls for 180 operating hours for the period. Each speaker requires 10 minutes of cell process time. The unit selling price for each speaker is $271. During the period, the following transactions occurred: Purchased materials to produce 580 speaker units. Applied conversion costs to production of 550 speaker units. Completed and transferred 530 speaker units to finished goods. Sold 505 speaker units. There were no inventories at the beginning of the period.
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.
Lean Accounting
Vintage Audio Inc. manufactures audio speakers. Each speaker requires $100 per unit of direct materials. The speaker manufacturing assembly cell includes the following estimated costs for the period:
| Speaker assembly cell, estimated costs: | ||
| Labor | $69,080 | |
| |
9,270 | |
| Supplies | 3,370 | |
| Power | 2,520 | |
| Total cell costs for the period | $84,240 |
The operating plan calls for 180 operating hours for the period. Each speaker requires 10 minutes of cell process time. The unit selling price for each speaker is $271. During the period, the following transactions occurred:
- Purchased materials to produce 580 speaker units.
- Applied conversion costs to production of 550 speaker units.
- Completed and transferred 530 speaker units to finished goods.
- Sold 505 speaker units.
There were no inventories at the beginning of the period.
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