Happy Trails has the following information for its manufacturing: Direct Materials $16 Direct Labor $14 Variable Manufacturing Overhead $2 Fixed Manufacturing Overhead $24 Units Produced 28,000 Units Sold 19,000 Its income statement under absorption costing is: Sales $1,900,000 Beginning Inventory $0 Cost of Goods Manufactured 1,568,000 Cost of Goods Available for Sale $1,568,000 - Ending Inventory 504,000 Cost of Goods Sold $1,064,000 Gross Profit $836,000 -Sales and Admin. Expenses: Variable $114,000 Fixed 300,000 Total Sales and Admin. Expenses $414,000 Net Operating Income $422,000
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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