Homework Answers
A) The process costing system is a system used by the companies which are producing similar or identical units of product producing continuous basis on the longer period. The example is Wrigley Company (Chewing Gum).
B)The job order costing is a method used by the companies which are producing unique products or jobs. examples are Deloitte and Touche (Accounting) and Boeing (Airplanes).
We have created a company known as ABC Company uses the process costing system and it's operating cycle is explained below:
This company is wine manufacturing company from Grapes and we have to find the cost per Gallon of producing 20,000 Gallons at each manufacturing stage of the company
The Manufacturing Stage:
1)Crushing Process
2)Packaging Process
Cost for manufacturing Wine:
a)Purchase of raw material mean grapes $ 200.000
b) Maintenance of Grapes $ 25,000
c) Direct labor $ 50.000
d) Packing material $ 15,000
e)Labor for packing $5.000
Process 1 - Crushing Process:
a)Purchase of raw material(grapes) $ 200.000 and cost per Gallon = $ 200,000/ 20,000 Gallons = $10 Per Gallon
b) Maintenance of Grapes $ 25,000 and cost per Gallon = $ 25,000/ 20,000 Gallons = $1.25 Per Gallon
c)Direct labor $ 50.000 and cost per Gallon = $50,000/ 20,000 Gallons = $2.5 Per Gallon
So, Total Crushing cost per unit =$10 +$1.25 + $2.5 = $13.75 Per Gallon
Process 2 - Packaging Process :
d) Packing material $ 15,000 and cost per Gallon = $15,000/ 20,000 Gallons = $0.75 Per Gallon
e)Labor for packing $5.000 and cost per Gallon = $5,000/ 20,000 Gallons = $0.25 Per Gallon
So, Total Packaging cost per unit =$0.75 +$0.25 = $1.0 Per Gallon
Total cost per unit = Total Crushing process cost per unit + Total Packaging process cost per unit
= $13.75 Per Gallon + $1.0 Per Gallon
= $14.75 Per Gallon
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