ACCT 2230 Chapter 3: Chapter 3 Managerial Accounting Notes

85 views2 pages

azurecrow744

17 Dec 2011

School

Department

Course

Professor

For unlimited access to Textbook Notes, a Class+ subscription is required.

Document Summary

Product costing is the process of assigning costs to the products & services provided by a company. Main purpose of managerial costing system should be to provide cost data to help managers plan, control, direct & make decisions. Absorptions costing: a costing method that includes all manufacturing costs direct material, direct labour & both variable & fixed overhead- as part of the cost of a finished unit of product (also called full cost) Many costs don"t change month to month (rent) while others do (production) = hard to determine cost of product/service. This costing system is used in situations where the company produces many units of a single product for long periods of time (eg. frozen orange juice) These systems accumulate costs in a particular operation/ department for an entire period (month, year etc. ) and then divide this total cost by the number of units produced during the period.

Related Questions

Identify each statement as true or false. If false, indicate howto correct the statement.

1. Process cost systems are used to apply costs to similarproducts that are mass-produced in a continuous fashion.
2. A process cost system is used when each finished unit isindistinguishable from another.
3. Companies that produce soft drinks, motion pictures, andcomputers chips would all use process cost accounting.
4. In a process cost system, costs are tracked by individualjobs.
5. Job order costing and process costing track differentmanufacturing costs elements.
6. Both job order costing and process costing account for directmaterials, direct labor, and manufacturing overhead.
7. Costs flow through the accounts in the same basic way for bothjob order costing and process costing.
8. In a process cost system, only one work in process account isused.
9. In a process cost system, costs are summarized in a job costsheet.
10. In a process cost system, the unit cost is total manufacturingcosts for the period divided by the units produced during theperiod.

byzantiumpanda529

Denton Company manufactures and sells a single product. Cost data for the product are given:


Variable costs per unit:
Direct materials			$	3
Direct labor				10
Variable manufacturing overhead				3
Variable selling and administrative				1
Total variable cost per unit			$	17
Fixed costs per month:
Fixed manufacturing overhead	$	63,000
Fixed selling and administrative		160,000
Total fixed cost per month	$	223,000

The product sells for $46 per unit. Production and sales data for July and August, the first two months of operations, follow:

	Units Produced	Units Sold
July	21,000	17,000
August	21,000	25,000

The companyâs Accounting Department has prepared the following absorption costing income statements for July and August:

	July		August
Sales	$	782,000	$	1,150,000
Cost of goods sold		323,000		475,000
Gross margin		459,000		675,000
Selling and administrative expenses		177,000		185,000
Net operating income	$	282,000	$	490,000

Required:

1. Determine the unit product cost under:

a. Absorption costing.

b. Variable costing.

2. Prepare contribution format variable costing income statements for July and August.

3. Reconcile the variable costing and absorption costing net operating incomes.

peachmacaw787

Lincoln Company, which has only one product, has provided thefollowing data concerning its most recent month of operations.

Selling price	$125

Units in beginning inventory	600
Units produced	3,000
Units sold	3,500
Units in ending inventory	100

Variable costs per unit:
Direct materials	$27
Direct labor	$18
Variable manufacturing overhead	$10
Variable selling and admin	$12

Fixed costs:
Fixed manufacturing overhead	$75,000
Fixed selling and admin	$30,000

Required:
What is the unit product cost for the month under variablecosting?
What is the unit product cost for the month under absorptioncosting?
Prepare an income statement for the month using the variablecosting method.
Prepare an income statement for the month using the absorptioncosting method.

Please show work for credit

beigesalmon41

ACCT 2230 Chapter 3: Chapter 3 Managerial Accounting Notes

Document Summary

Get access

Related Documents

ACCT 2230 Chapter : Managerial Accounting Chapter Three Notes

ACCT 2230 Lecture Notes - Lecture 5: Cost Driver, European Cooperation In Science And Technology, Enterprise Resource Planning

ACCT 2230 Chapter Notes - Chapter 3: Finished Good, Kilogram, Deutsche Luft Hansa

Related Questions