Description
You have been hired as a managerial accountant by Mr. Smith of Wilson-West Manufacturing, a start-up company that produces several different product lines. He would like you to set up the cost accounting system for the cabinet division. Listed below are your new job requirements and at least 1 task for each.
Compile a document or 1200-1500 words with the following requirements:
- Types of costs
- Explain what types of costs you plan on using to distinguish the different types of cabinets that will be produced.
- Examples should include direct costs items, indirect costs items, as well as variable costing.
- What are at least 5 types of expenses that are associated with manufacturing the cabinets?
- Explain what types of costs you plan on using to distinguish the different types of cabinets that will be produced.
- Cost accounting methods
- Explain how product costing is used for a cabinet division.
- Give 2 examples of how you will use product costing.
- Which costing method will you use for the cabinet division: Activity-based costing (ABC), job order costing, or process costing?
- Validate your answer with 2–3 reasons for and 2–3 reasons against the other types of costing.
Explanation & Answer
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Cost Accounting System for a Cabinet Division
Introduction
Types of Cost
Types of Costs Incurred in the Manufacturing of Cabinet Division
Direct Cost
Indirect Costs
Variable Costs
Type of Expenses Related to the Manufacturing of Cabinets
Operating Expense
Administrative Expense
Variable Expense
Depreciation Expenses
Utility Expenses
Accounting Methods
Benefits of Product Cost
Examples Of How Product Costs Can Be Used
Suitable Costing Method for use in the Manufacture of Cabinet Divisions
Reasons for using Job Order Costing
References
Running head: COST ACCOUNTING SYSTEM
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Cost Accounting System for a Cabinet Division
Student’s Name
Institution Affiliation
Date
COST ACCOUNTING SYSTEM FOR CABINET DIVISION
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Cost Accounting System for a Cabinet Division
Introduction
A cost accounting system is a method applied by companies to determine the cost of their
goods and services for warehouse inventory valuation, income analysis, and cost regulation.
Approximating the prices of products is vital for profit analysis. Through the accounting system,
a firm can determine profitable products (Investopedia, 2018). The cost accounting system is
also important in the estimation of the closing value of the products in the store to prepare a
financial statement.
Types of Cost
Types of Costs Incurred in the Manufacturing of Cabinet Division
There are various types of costs incurred in the manufacturing of cabinet division for
different product lines. An organization requires finances to fund the company's operations or to
produce products (eFinance, 2019). These costs include operating costs and manufacturing costs,
which are divided into three types of accounting. The manufacturing cost dep...
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