Schultz Company reported the following information about the production and sales of its only product: Direct material used $64,000 Direct labour 40,000 Variable factory overhead 24,000 Fixed factory overhead 32,000 Variable selling and administrative expenses 8,000 Fixed selling and administrative expenses 12,000 Beginning inventories None Ending inventories: Direct materials -0- WIP -0- Finished goods 600 units Sales (@ $90 per unit) $126,000 a) Calculate the following for Schultz Company i) The total cost per unit ii) The value of ending inventory under: - Variable costing. - Total costing iii) The cost of goods sold under - Marginal costing - Total costing b) Prepare a marginal costing income statement clearly showing contribution margin and operating income. c) What is the gross profit under total 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.
Schultz Company reported the following information about the production and sales of its only
product:
Direct material used $64,000
Direct labour 40,000
Variable factory
Fixed factory overhead 32,000
Variable selling and administrative expenses 8,000
Fixed selling and administrative expenses 12,000
Beginning inventories None
Ending inventories: Direct materials -0-
WIP -0-
Finished goods 600 units
Sales (@ $90 per unit) $126,000
a) Calculate the following for Schultz Company
i) The total cost per unit
ii) The value of ending inventory under: - Variable costing.
- Total costing
iii) The cost of goods sold under - Marginal costing
- Total costing
b) Prepare a marginal costing income statement clearly showing contribution margin and
operating income.
c) What is the gross profit under total costing?
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