Cherry Company manufactures wooden end tables for college apartments. Last year, direct materials costing $250,000 were put into production. Direct labor of $150,000 was incurred, and overhead equaled $100,000. The company had operating income for the year of $300,000 and manufactured and sold 50,000 tables at a sales price of $40 per unit. Assume that there were no beginning or ending inventory balances in the work-in-process and finished goods inventory accounts. Required: A. Compute the per-unit product cost. Round answer to two decimal places. B. Compute the per-unit prime cost. Round answer to two decimal places. C. Compute the per-unit conversion cost. Round answer to two decimal places. D. Compute the gross margin for the year. E. Compute the selling and administrative expenses for the year. F. Now assume that production amounted to 50,000 tables but only 48,000 were sold. Compute the cost of goods sold. G. Now assume that production amounted to 50,000 tables but that only 48,000 were sold. Compute the balance in ending finished goods inventory.
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.
Required:
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A. |
Compute the per-unit product cost. Round answer to two decimal places. |
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B. |
Compute the per-unit prime cost. Round answer to two decimal places. |
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C. |
Compute the per-unit conversion cost. Round answer to two decimal places. |
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D. |
Compute the gross margin for the year. |
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E. |
Compute the selling and administrative expenses for the year. |
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F. |
Now assume that production amounted to 50,000 tables but only 48,000 were sold. Compute the cost of goods sold. |
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G. |
Now assume that production amounted to 50,000 tables but that only 48,000 were sold. Compute the balance in ending finished goods inventory. |
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