The following costs were incurred by ABC Company: Direct labor $ 950,000 Direct material purchases 645,000 Depreciation on plant 55,000 Factory supervisor's salary 98,000 Plant maintenance 26,000 Plant utilities 30,000 Sales 2,555,000 Selling and administrative expenses 480,000 Beginning direct materials inventory 72,000 Beginning work-in-process inventory 54,000 Beginning finished goods inventory 75,000 Ending direct materials inventory 68,000 Ending work-in-process inventory 51,000 Ending finished goods inventory 88,000 Required: Calculate the following values: Direct materials used Cost of goods manufactured Cost of goods sold Operating income
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 costs were incurred by ABC Company:
Direct labor $ 950,000
Direct material purchases 645,000
Factory supervisor's salary 98,000
Plant maintenance 26,000
Plant utilities 30,000
Sales 2,555,000
Selling and administrative expenses 480,000
Beginning direct materials inventory 72,000
Beginning work-in-process inventory 54,000
Beginning finished goods inventory 75,000
Ending direct materials inventory 68,000
Ending work-in-process inventory 51,000
Ending finished goods inventory 88,000
Required:
Calculate the following values:
- Direct materials used
- Cost of goods manufactured
- Cost of goods sold
- Operating income
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