6. Boss Company, a manufacturer of headphones, started its production in month of May 2020. Raw materials cost for a headphone will total $40 per unit. Workers on the production lines are on average paid $12 per hour. A headphone usually takes 4 hours to complete. In addition, the rent on the equipment used to assemble phones amounts to $7,200 per month. Indirect materials cost $4 per headphone. A supervisor was hired to oversee production; her monthly salary is $2,500. Factory Cleaning costs are $1,000 monthly. Advertising costs to sell headphones will be 9,500 per month. The factory building depreciation expense is $2,400 per month. Property taxes on the factory building will be $10,800 per year. Depreciation of the office building is $6,000 per annum. Boss manufactures, on average, 1400 headphones per month, Instructions: (a) Prepare an answer sheet with the following column headings for Product and Period cost. (b) Compute the cost to produce one headphone.
6. Boss Company, a manufacturer of headphones, started its production in month of May 2020. Raw materials cost for a headphone will total $40 per unit. Workers on the production lines are on average paid $12 per hour. A headphone usually takes 4 hours to complete. In addition, the rent on the equipment used to assemble phones amounts to $7,200 per month. Indirect materials cost $4 per headphone. A supervisor was hired to oversee production; her monthly salary is $2,500. Factory Cleaning costs are $1,000 monthly. Advertising costs to sell headphones will be 9,500 per month. The factory building depreciation expense is $2,400 per month. Property taxes on the factory building will be $10,800 per year. Depreciation of the office building is $6,000 per annum. Boss manufactures, on average, 1400 headphones per month, Instructions: (a) Prepare an answer sheet with the following column headings for Product and Period cost. (b) Compute the cost to produce one headphone.
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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.
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Transcribed Image Text:6. Boss Company, a manufacturer of headphones, started its production in month of May 2020.
Raw materials cost for a headphone will total $40 per unit. Workers on the production lines
are on average paid $12 per hour. A headphone usually takes 4 hours to complete.
In addition, the rent on the equipment used to assemble phones amounts to $7,200 per
month. Indirect materials cost $4 per headphone. A supervisor was hired to oversee
production; her monthly salary is $2,500. Factory Cleaning costs are $1,000 monthly.
Advertising costs to sell headphones will be 9,500 per month. The factory building
depreciation expense is $2,400 per month. Property taxes on the factory building will be
$10,800 per year. Depreciation of the office building is $6,000 per annum.
Boss manufactures, on average, 1400 headphones per month,
Instructions:
(a) Prepare an answer sheet with the following column headings for Product and Period cost.
(b) Compute the cost to produce one headphone.
Cost items
Product cost
Period Cost
Direct
Direct
Manufacturing
Material
Labor
Overheads
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