Homework: Introduction to Managerial & Cost Accounting
Length: 1200 to 1500 words.
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:
o Direct labor
o Direct materials
o Utilities
o Depreciation
o Maintenance
o Insurance on the equipment
o Rent on the plant
o Administrative salaries
o Rent for the office
In a memo format, explain to Mr. Smith and the president what will be included in product costing.
1) Explain what is involved in a product costing system.
2) Explain why Wilson-West Manufacturing needs to have a product costing system.
3) Allocate the above expenses as fixed, mixed, or variable expenses.
4) Prepare calculations for the following, and explain your computations:
a. Variable cost: The unit rate is $0.25, and the actual hours used for manufacturing are 15,000.
b. Mixed cost: The unit rate is $0.25, actual hours are 10,000, and the fixed cost is $5,000 per month.
c. Total cost: Use your calculations from above.
5) Explain this to Mr. Smith who will prepare these calculations on a monthly basis.
Format your homework according to the following formatting requirements:
(1) The answer should be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides.
(2) The response also includes a cover page containing the title of the homework, the student's name, the course title, and the date. The cover page is not included in the required page length.
(3) Also include a reference page. The Citations and references should follow APA format. The reference page is not included in the required page length.