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Assignment Type: Individual Project Deliverable Length: 1-2 sentences per question Points Possible: 125 Due Date: 5/5/2013 11:59:59 PM CT APA formatted references Your company, a medium-sized...

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Assignment Type:Individual Project Deliverable Length:1-2 sentences per question
Points Possible: 125 Due Date:5/5/2013 11:59:59 PM CT
APA formatted references

Your company, a medium-sized manufacturer of widgets, has just held the annual end of year "State of the Business" meeting for all employees. The president discussed how well the company has been doing, focusing on presenting the Income Statement for the last year. During the meeting, he used terms like product costs, and period costs, and how each affects the company's profits. He also announced that going forward, instead of manufacturing just one standard type of widgets, there will be a new department added that will make custom versions of the firm's normal product line.

At the end of the meeting, he asks each supervisor to prepare a memo to his or her own employees, describing in layman's terms the following concepts:

  • What are the differences between product and period costs?
  • Why is it important to properly distinguish one type of cost from the other?
  • Where on the firm's income statement will period costs usually show up?
  • Where on the firm's income statement would product costs end up?
  • The new department will make use of a job order costing system. How and why will this differ from the current process costing system used elsewhere in the plant?
  • Provide 2 examples of companies that would use:
    • job order costing
    • process costing
    • explain your answers

Sample Income Statement

+

Sales

-

COGS

=

Gross profit or gross margin

-

Selling, General, Administrative expenses

=

Net income

In your own words, please post a response to the Discussion Board and comment on other postings. You will be graded on the quality of your postings.

The following grading criteria will be used:

Grading Guidelines

30%
  • What are the differences between product and period costs?
  • Why is it important to properly distinguish one type of cost from the other?

10%
  • Where on the firm's income statement will period costs usually show up?
  • Where on the firm's income statement would product costs end up?

30%
  • The new department will make use of a job order costing system. How and why will this differ from the current process costing system used elsewhere in the plant?

30%

Provide 2 examples of companies that would use:

  • job order costing
  • process costing
  • explain your answers
Answered Same Day Dec 23, 2021

Solution

Robert answered on Dec 23 2021
132 Votes
QUESTION:
What are the differences between product and period costs?
SOLUTION:
Product Cost is the cost incu
ed in manufacturing the product and includes direct materials,
direct labor and manufacturing overhead. These are necessary the cost of manufacturing the
products. Period Costs are not necessary the part of manufacturing process. These are generally
elated to selling function and general administration of business.
QUESTION:
Why is it important to properly distinguish one type of cost from the other?
SOLUTION:
It is necessary that cost of different types shall be clearly distinguished so as to ensure their
proper recording and accounting. Classification of costs differently ensures proper presentation
of results or accurate preparation of cost accounting records.
QUESTION:
Where on the firm's income statement will...
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