Question
In: Accounting
If the company is in its first year of operations, what costs should be taken as...
If the company is in its first year of operations, what costs should be taken as reference for the establishment of standard costs?
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Expert Solution
Answer : - Whenever you have set goals that you have sought to achieve, these goals could have been called standards. Periodically, you might measure your actual performance against these standards and analyze the differences to see how close you are to your goal. Similarly, management sets goals, such as standard costs, and compares actual costs with these goals to identify possible problems.
This section begins with a discussion of the nature of standard costs.
Manufacturing companies determine the standard cost of each unit of product by establishing the standard cost of direct materials, direct labor, and manufacturing overhead necessary to produce that unit. Determining the standard cost of direct materials and direct labor is less complicated than determining the standard cost of manufacturing overhead.
Following costs should be taken as reference for the establishment of standard costs:-
1. Material Cost
2. Material Usage/ consumption
3. labour cost
4. Wages, Salaries, Payroll Taxes, and Benefits
5.Advertising and Marketing Costs
6. Fixed Overhead expenditure
7. Variable Overhead expenditure
ekkarill92 answered 1 year agoRelated Solutions
Yoshida Company is a semiconductor company based in Dapto. In the first year of its operations...
Yoshida Company is a semiconductor company based in Dapto. In
the first year of its operations in 2019, it produced a new router
system for its corporate clients. The average wholesale selling
price of the system is $600 each. Yoshida’s actual 2019 costs
are:
Variable cost per unit
Direct materials $65
Direct manufacturing labour $45
Manufacturing overhead $140
Total $250
Fixed costs
Manufacturing costs $2,400,000
Administration and marketing $2,000,000
Total $4,400,000
During 2019, Electron Company produced 24,000 units and 20,000...
Richardson Company is in its first year of operations as a hardware and software retailer (with...
Richardson Company is in its first year of operations as a
hardware and software retailer (with occasional consulting jobs).
Richardson reports the following current year results (without
respect to the type of entity): “Business” Income: Sales (net of
returns and allowances) $ 490,000 Gross Consulting Fees Collected
30,000 Dividend Income (5% investment in Novice Software Co.) 4,000
Loss on Sale of Novice Stock ($28,000 - $33,000, held 11 months) (
5,000) “Business” Expenses and Costs: Cost of Goods Sold (142,200)...
Sunshine Company is a calendar year accrual-basis taxpayer and is in its first year of operations....
Sunshine Company is a calendar year accrual-basis taxpayer and
is in its first year of operations. Sunshine Company had the
following income, expense, and loss items for the current year:
Sales
$650,000
Corporate dividend (from 5% owned corporation)
60,000
Municipal bond interest
25,000
Long-term capital gain
0
Short-term capital loss
(8,000)
Cost of goods sold
320,000
Depreciation
65,000
Nondeductible fines
4,000
Advertising
7,000
Utilities
6,000
Rent
5,000
Furthermore, Sunshine’s liabilities (all recourse) increased
from $0 on 1/1 to $300,000 on...
Sunshine Company is a calendar year accrual-basis taxpayer and is in its first year of operations....
Sunshine Company is a calendar year accrual-basis taxpayer and
is in its first year of operations. Sunshine Company had the
following income, expense, and loss items for the current year:
Sales
$650,000
Corporate dividend (from 5% owned corporation)
60,000
Municipal bond interest
25,000
Long-term capital gain
0
Short-term capital loss
(8,000)
Cost of goods sold
320,000
Depreciation
65,000
Nondeductible fines
4,000
Advertising
7,000
Utilities
6,000
Rent
5,000
Furthermore, Sunshine’s liabilities (all recourse) increased
from $0 on 1/1 to $300,000 on...
Sunshine Company is a calendar year accrual-basis taxpayer and is in its first year of operations....
Sunshine Company is a calendar year accrual-basis taxpayer and
is in its first year of operations. Sunshine Company had the
following income, expense, and loss items for the current year:
Sales
$650,000
Corporate dividend (from 5% owned corporation)
60,000
Municipal bond interest
25,000
Long-term capital gain
0
Short-term capital loss
(8,000)
Cost of goods sold
320,000
Depreciation
65,000
Nondeductible fines
4,000
Advertising
7,000
Utilities
6,000
Rent
5,000
Furthermore, Sunshine’s liabilities (all recourse) increased
from $0 on 1/1 to $300,000 on...
Meganol Company is a calendar year accrual-basis taxpayer and is in its first year of operations....
Meganol Company is a calendar year accrual-basis taxpayer and is
in its first year of operations. Meganol Company had the following
income, expense, and loss items for the current year:
Sales
$650,000
Corporate dividend (from 5% owned corporation)
60,000
Municipal bond interest
25,000
Long-term capital gain
0
Short-term capital loss
(8,000)
Cost of goods sold
320,000
Depreciation
65,000
Nondeductible fines
4,000
Advertising
7,000
Utilities
6,000
Rent
5,000
Furthermore, Meganol's liabilities (all recourse) increased from
$0 on 1/1 to $300,000 on...
Sunshine Company is a calendar year accrual-basis taxpayer and is in its first year of operations....
Sunshine Company is a calendar year accrual-basis taxpayer and
is in its first year of operations. Sunshine Company had the
following income, expense, and loss items for the current year:
Sales
$650,000
Corporate dividend (from 5% owned corporation)
60,000
Municipal bond interest
25,000
Long-term capital gain
0
Short-term capital loss
(8,000)
Cost of goods sold
320,000
Depreciation
65,000
Nondeductible fines
4,000
Advertising
7,000
Utilities
6,000
Rent
5,000
Furthermore, Sunshine’s liabilities (all recourse) increased
from $0 on 1/1 to $300,000 on...
Sunshine Company is a calendar year accrual-basis taxpayer and is in its first year of operations....
Sunshine Company is a calendar year accrual-basis taxpayer and
is in its first year of operations. Sunshine Company had the
following income, expense, and loss items for the current year:
Sales
$650,000
Corporate dividend (from 5% owned corporation)
60,000
Municipal bond interest
25,000
Long-term capital gain
0
Short-term capital loss
(8,000)
Cost of goods sold
320,000
Depreciation
65,000
Nondeductible fines
4,000
Advertising
7,000
Utilities
6,000
Rent
5,000
Furthermore, Sunshine’s liabilities (all recourse) increased
from $0 on 1/1 to $300,000 on...
Sunshine Company is a calendar year accrual-basis taxpayer and is in its first year of operations....
Sunshine Company is a calendar year accrual-basis taxpayer and
is in its first year of operations. Sunshine Company had the
following income, expense, and loss items for the current year:
Sales $650,000 Corporate dividend (from 5% owned corporation)
60,000 Municipal bond interest 25,000 Long-term capital gain 0
Short-term capital loss (8,000) Cost of goods sold 320,000
Depreciation 65,000 Nondeductible fines 4,000 Advertising 7,000
Utilities 6,000 Rent 5,000 Furthermore, Sunshine’s liabilities (all
recourse) increased from $0 on 1/1 to $300,000 on...
Flaherty, Inc., has just completed its first year of operations. The unit costs on a normal...
Flaherty, Inc., has just completed its first year of operations.
The unit costs on a normal costing basis are as follows:
Manufacturing costs (per unit):
Direct materials (2 lbs. @ 1.45): $2.90
Direct labor (0.4 hr. @ 16.00): $6.40
Variable overhead (0.4 hr. @ 5.00): $2.00
Fixed overhead (0.4 hr. @ 7.00): $2.80
Total: $14.10
Selling and administrative costs:
Variable: $1.90 per unit
Fixed: $221,500
During the year, the company had the following activity:
Units produced: 26,000
Units sold: 23,400...
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