In the coming year, Kalling Company expects to sell 28,700 units at $32 each. Kalling’s controller provided the following information for the coming year: Units production 30,000 Unit direct materials $ 9.95 Unit direct labor $ 2.75 Unit variable overhead $ 1.65 Unit fixed overhead* $ 2.50 Unit selling expense (variable) $ 2.00 Total fixed selling expense $ 65,500 Total fixed administrative expense $231,000 * The unit fixed overhead is based on 30,000 units produced. Required: 1. Calculate the cost of one unit of product under absorption costing. $ 2. Calculate the cost of one unit of product under variable costing. $ 3. Calculate operating income under absorption costing for next year. $
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.
In the coming year, Kalling Company expects to sell 28,700 units at $32 each. Kalling’s controller provided the following information for the coming year:
| Units production | 30,000 |
| Unit direct materials | $ 9.95 |
| Unit direct labor | $ 2.75 |
| Unit variable overhead | $ 1.65 |
| Unit fixed overhead* | $ 2.50 |
| Unit selling expense (variable) | $ 2.00 |
| Total fixed selling expense | $ 65,500 |
| Total fixed administrative expense | $231,000 |
* The unit fixed overhead is based on 30,000 units produced.
Required:
1. Calculate the cost of one unit of product under absorption costing.
$
2. Calculate the cost of one unit of product under variable costing.
$
3. Calculate operating income under absorption costing for next year.
$
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