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Explain what is involved in a product costing system

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Reference no: EM131458438

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Assignment Description

You, the managerial accountant, are asked by the CFO (Mr. Smith) of Wilson-West Manufacturing (a new company) to set up a product costing system.

The following are the types of expenses that will be included:

Direct labor
Direct materials

Utilities

Depreciation

Maintenance

Insurance on the equipment

Rent on the plant

Administrative salaries

Rent for the office

In a memo format, explain to Mr. Smith and the president what will be included in product costing.

Explain what is involved in a product costing system.

Explain why Wilson-West Manufacturing needs to have a product costing system.

Allocate the above expenses as fixed, mixed, or variable expenses.

Prepare calculations for the following, and explain your computations:

Variable cost: The unit rate is $0.25, and the actual hours used for manufacturing are 15,000.

Mixed cost: The unit rate is $0.25, actual hours are 10,000, and the fixed cost is $5,000 per month.

Total cost: Use your calculations from above.

Explain this to Mr. Smith who will prepare these calculations on a monthly basis.

Deliverable Length: 400-500 words

Verified Expert

This is an individual assignment, of financial management, which helps in understanding the importance of costing, product costing methods, further it consisting of illustration of given company, which has mainly three type of cost, fixed, variable, mixed cost

Reference no: EM131458438

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