Trio Company reports the following information for its first year of operations. Direct materials $ 13 per unit Direct labor $ 17 per unit Variable overhead $ 7 per unit Fixed overhead $ 220,950 per year Units produced 24,550 units Units sold 18,000 units Ending finished goods inventory 6,550 units Assume instead that Trio Company uses variable costing. 1. Compute the product cost per unit using variable costing. 2. Determine the cost of ending finished goods inventory using variable costing. 3. Determine the cost of goods sold using variable costing.
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.
Trio Company reports the following information for its first year of operations.
| Direct materials | $ 13 | per unit |
|---|---|---|
| Direct labor | $ 17 | per unit |
| Variable overhead | $ 7 | per unit |
| Fixed overhead | $ 220,950 | per year |
| Units produced | 24,550 | units |
| Units sold | 18,000 | units |
| Ending finished goods inventory | 6,550 | units |
Assume instead that Trio Company uses variable costing.
1. Compute the product cost per unit using variable costing.
2. Determine the cost of ending finished goods inventory using variable costing.
3. Determine the cost of goods sold using variable costing.
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