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Overview Companies choose their costing method based on their business activities and processes, as well as the products and services they offer. A company can be a manufacturing, merchandising, or...

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Overview

Companies choose their costing method based on their business activities and processes, as well as the products and services they offer. A company can be a manufacturing, merchandising, or service organization; this also impacts which costing method will be most useful for its purposes. As a part of costing, the company also needs to decide how to classify overhead costs using either traditional or activity-based costing (ABC).

In this written assignment, you will choose a company, consider its business and costing requirements, and recommend a costing system that will work best for the business.

Prompt

Think about a company you know. This could be a current or past employer or a company you admire. Consider its business activities and the type of products and services offered. Based on what you have learned so far, write a short paper that reflects on the different costing methods and speculates on how they might apply to your selected company.

Specifically, you must address the following rubric criteria:

  • Company Overview: Identify the company you selected and provide a brief overview of its business.
    • Is it a manufacturing, merchandising, or service organization?
  • Costing Methods: Compare the job order and process costing methods, and explain how each of these can be applied to the company.
    • How could the costs differ if one method is chosen over the other?
  • Factory Overhead: Outline possible indirect or overhead costs the company may need to account for, and identify the type of costing the company might use for these costs.
    • If the company decides to use activity-based costing (ABC), what are some activity bases (cost drivers) it might use to allocate these costs?
  • Recommendation: Based on your analysis, recommend a costing method for the company, and explain why you think this method will work best for the business.

Guidelines for Submission

Submit your assignment as a 2- to 4-page Word document. Sources should be cited according to APA style.

Module Three Assignment Rubric

CriteriaExemplaryProficientNeeds ImprovementNot EvidentValue
Company OverviewN/AIdentifies the company selected and provides a brief overview of its business, including specifying whether it is a manufacturing, merchandising, or service organization (100%)Shows progress toward proficiency, but with errors or omissions; areas for improvement may include providing a clear company overview and specifying the nature of the business (85%)Does not attempt criterion (0%)10
Costing MethodsExceeds proficiency in an exceptionally clear, insightful, sophisticated, or creative manner (100%)Compares the job order and process costing methods; explains how each of these can be applied to the selected company; specifies how the costs would be affected in each method (85%)Shows progress toward proficiency, but with errors or omissions; areas for improvement may include adequately describing the two costing methods and how they can be applied to the company and specifying how the costs would differ if one method is chosen over the other (55%)Does not attempt criterion (0%)30
Factory OverheadOutlines possible indirect or overhead costs the company may need to account for; identifies the type of costing the company might use for these costs; identifiesmore than oneactivity base the company may use if it chooses ABC to allocate overhead costs (100%)Outlines possible indirect or overhead costs the company may need to account for; identifies the type of costing the company might use for these costs; identifiesat least oneactivity base the company may use if it chooses ABC to allocate overhead costs (85%)Shows progress toward proficiency, but with errors or omissions; areas for improvement may include listing relevant and plausible overhead costs for the selected business; identifying a costing method for allocating the overhead costs; and identifying correct activity bases for use with the ABC method (55%)Does not attempt criterion (0%)30
RecommendationExceeds proficiency in an exceptionally clear, insightful, sophisticated, or creative manner (100%)Recommends a costing method for the company; uses sound reasoning to explain why this method will work best for the business (85%)Shows progress toward proficiency, but with errors or omissions; areas for improvement may include using clear, sound reasoning to explain why the recommended costing method would work best (55%)Does not attempt criterion (0%)20
Articulation of ResponseExceeds proficiency in an exceptionally clear, insightful, sophisticated, or creative manner (100%)Clearly conveys meaning with correct grammar, sentence structure, and spelling, demonstrating an understanding of audience and purpose (85%)Shows progress toward proficiency, but with errors in grammar, sentence structure, and spelling, negatively impacting readability (55%)Submission has critical errors in grammar, sentence structure, and spelling, preventing understanding of ideas (0%)5
Citations and AttributionsUses citations for ideas requiring attribution, with few or no minor errors (100%)Uses citations for ideas requiring attribution, with consistent minor errors (85%)Uses citations for ideas requiring attribution, with major errors (55%)Does not use citations for ideas requiring attribution (0%)5
Total:100%
Answered 3 days After Sep 10, 2021

Solution

Sumit answered on Sep 14 2021
152 Votes
Company Overview:
The Business that I have chosen for this assignment is “Nothing bundt Cakes”. The main business of the company is making and selling cakes. The company was founded in the year 1997 in Las Vegas by Dena Tripp and De
ie Shwetz. The two friends started the company by making cakes for friends and family and once they started getting more and more sale orders, they started expanding the company and today the company is selling nationwide. The company has also started franchising the business of the company to cover the large part of the country. With this the company will have larger presence in the market and the overall sale and profitability of the company will increase.
The company is proud of using the finest ingredients. The company uses real eggs, butter and cream cheese and all that with the speed of providing quick delivery to the customers. The vision of the company is to provide warmth and nostalgic feeling of home kitchen roots with the modern approach of today. The nature of the business is manufacturing since the business bakes cakes as per the customer orders and sells them to the customer.
Costing Methods:
Job Costing refers to costing method that combines the total cost of individual job. This method is used to calculate the total cost of an individual job received by the business. For Example: if a customer has given customized order for cake, then the cost of making the cake will be calculated using Job Costing. Under this method, the business needs to maintain detailed records to calculate the cost of the job. Generally, this costing method is used only for unique products. The method is also used in industries where orders are needed to be completed as per the customer specifications. For Example: Unique Furniture, Tax firms etc.
Process Costing refers to the costing method that is used to calculate the total cost of finished goods...
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