Question

In: Accounting

Choose a manufacturing company and explain if its inventory should use a hybrid-costing system (combination of...

Choose a manufacturing company and explain if its inventory should use a hybrid-costing system (combination of process costing and job order costing). Explain what type of manufacturing company would choose to use a hybrid-costing system.

Solutions

Expert Solution

Hybrid costing system is the combination of both process costing and job costing. In process costing the cost for producing identical units through various processes is determined, where as in job costing cost for a single and each and every unique customised product us determined.

And in general every product will go through same processes upto some level of production and after coming from that level each product will be designed according to the Models designed or as per the requirements of the customers. Here there is the combination of process and job costing which is called as Hybrid costing system.

Textile industry is one of the industry in which hybrid costing system should be used for its inventory. Because in textile industry while producing shirts, the process of cutting the clothes, stitching the clothes will follow the process. As upto that stage every product is identical. After that every shirt will go for further designing process where each shitr will be designed uniquely as per the designed models or requirements of the customers or may be as per the current trend and demanded fashions.

Hybrid system of costing is used in this type of manufacturing industry where both, process at different levels and unique designing at last level is involved in the manufacturing process of that product manufacturing industry.

For example :- Motor bikes, Refrigerators, Furniture, textile etc...


Related Solutions

Inventory Costing Methods-Perpetual Method Kali Company uses the perpetual inventory system for its merchandise inventory. The...
Inventory Costing Methods-Perpetual Method Kali Company uses the perpetual inventory system for its merchandise inventory. The June 1 inventory for one of the items in the merchandise inventory consisted of 60 units with a unit cost of $45. Transactions for this item during June were as follows: June 5 Purchased 40 units @ $50 per unit 13 Sold 50 units @ $95 per unit 25 Purchased 40 units @ $53 per unit 29 Sold 20 units@ $110 per unit Required...
Periodic Inventory System and Inventory Costing Methods During its first year of operation, Lux Company purchased...
Periodic Inventory System and Inventory Costing Methods During its first year of operation, Lux Company purchased 5,600 units of a product at $42 per unit. During the second year, it purchased 6,000 units of the same product at $48 per unit. During the third year, it purchased 5,000 units at $60 per unit. Lux managed to have an ending inventory each year of 1,000 units. The company uses the periodic inventory system. Prepare cost of goods sold statements that compare...
Explain three (3) advantages in using activity based costing system for a manufacturing company.
Explain three (3) advantages in using activity based costing system for a manufacturing company.
Why might a company choose a process costing system over a job order costing system? How...
Why might a company choose a process costing system over a job order costing system? How are the two systems similar, and how are they different?
Champion Manufacturing Company uses the FIFO method in its process costing system. The records of Champion...
Champion Manufacturing Company uses the FIFO method in its process costing system. The records of Champion Manufacturing Company for the month of May show the following costs in Department A: Beginning Inventory $ 80,500 Direct Materials 270,000 Direct Labor 357,000 Overhead (150% of Direct Labor Cost) 535,500 Total $1,243,000 The beginning inventory for May consisted of 10,000 units which were 80% complete as to direct materials and 60% complete as to labor and overhead. A total of 100,000 units was...
What is a company that would use a job costing system and explain why. In addition,...
What is a company that would use a job costing system and explain why. In addition, what is an example of a company that uses a process costing and explain why.
A company uses a process costing system. Its Assembly Department's beginning inventory consisted of 52,000 units,...
A company uses a process costing system. Its Assembly Department's beginning inventory consisted of 52,000 units, 75% complete with respect to direct labor and overhead. The department completed and transferred out 122,500 units this period. The ending inventory consists of 42,000 units that are 25% complete with respect to direct labor and overhead. All direct materials are added at the beginning of the process. The department incurred direct labor costs of $29,000 and overhead costs of $37,000 for the period....
25) A company uses a process costing system. Its Assembly Department's beginning inventory consisted of 30,000...
25) A company uses a process costing system. Its Assembly Department's beginning inventory consisted of 30,000 units, 75% complete with respect to direct labor and overhead. The value of beginning inventory was $275,000 which consisted of $190,000 of conversion costs and $85,000 of direct material costs. The department completed and transferred out 127,500 units this period. The ending inventory consists of 20,000 units that are 25% complete with respect to conversion costs (direct labor and overhead). All direct materials are...
Inventory Costing Methods-Perpetual Method Fortune Stores uses the perpetual inventory system for its merchandise inventory. The...
Inventory Costing Methods-Perpetual Method Fortune Stores uses the perpetual inventory system for its merchandise inventory. The April 1 inventory for one of the items in the merchandise inventory consisted of 130 units with a unit cost of $335. Transactions for this item during April were as follows: April 9 Purchased 40 units @ $355 per unit 14 Sold 80 units @ 560 per unit 23 Purchased 20 units @ 360 per unit 29 Sold 40 units Required a. Calculate the...
PROBLEM ONE The Kitty Manufacturing Company uses a standard absorption costing job costing system. Manufacturing overhead...
PROBLEM ONE The Kitty Manufacturing Company uses a standard absorption costing job costing system. Manufacturing overhead is allocated to products on the basis of standard direct labor hours. At the beginning of 20xx, Kitty adopted the following standards for its manufacturing costs: Direct materials           3 lb. @ $5 per lb. Direct labor                 5 hr @ $10 per hour Overhead: Variable           $5 per direct labor hour Fixed               $10 per direct labor hour The denominator level for total...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT