Classification of Costs Papa’s Pizza Heaven serves take-out pizza from three locations inColumbus, Maryland. Papa’s considers each pizza delivered (even if the order is for two or morepizzas) as the cost object for the company. The company incurs the following costs:1. Food costs, including pizza dough, olive oil, tomato sauce, mozzarella cheese, mushrooms, bellpeppers, Italian sausage, chopped fresh basil, pesto, pepperoni, onions, and ham2. Salaries for drivers3. Salaries for telephone operators4. Salaries for cooks5. Insurance for drivers6. Utilities (e.g., water and electricity)7. Advertising8. Discount coupons offered in local newspapers to attract customers9. Food handling licenses, inspections, and fees10. Accounting and payroll services11. Cooking supplies12. Cleaning supplies13. Mortgage payments on the three locations owned by Papa’s Pizza Heaven14. Insurance on facilitiesRequired1. For each cost item, indicate whether it is fixed or variable relative to the cost object.2. For each cost item, indicate whether it is a product or a period cost.3. Which of the above costs could have potentially harmful environmental effects, and why?
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.
Classification of Costs Papa’s Pizza Heaven serves take-out pizza from three locations in
Columbus, Maryland. Papa’s considers each pizza delivered (even if the order is for two or more
pizzas) as the cost object for the company. The company incurs the following costs:
1. Food costs, including pizza dough, olive oil, tomato sauce, mozzarella cheese, mushrooms, bell
peppers, Italian sausage, chopped fresh basil, pesto, pepperoni, onions, and ham
2. Salaries for drivers
3. Salaries for telephone operators
4. Salaries for cooks
5. Insurance for drivers
6. Utilities (e.g., water and electricity)
7. Advertising
8. Discount coupons offered in local newspapers to attract customers
9. Food handling licenses, inspections, and fees
10. Accounting and payroll services
11. Cooking supplies
12. Cleaning supplies
13. Mortgage payments on the three locations owned by Papa’s Pizza Heaven
14. Insurance on facilities
Required
1. For each cost item, indicate whether it is fixed or variable relative to the cost object.
2. For each cost item, indicate whether it is a product or a period cost.
3. Which of the above costs could have potentially harmful environmental effects, and why?
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