Justify to the CEO what type of costing method (job- order, process costing, variable costing and/or...

  

 

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Justify to the CEO what type of costing method (job- order, process costing, variable costing and/or activity-based costing) you would recommend AFC use. Assume that all of the items produced are sold. Use the following accounting data in your analysis. Production & Cost Description Production & Cost Amounts 5000 chairs/10 batches; 4000 Annual Production tables/20 batches; 3000 dressers/20 batches Raw materials in board 1 chair = 10 BF; 1 table = 15 BF; feet (BF) per unit Raw materials price per unit Assembly labor time (hours per unit) Labor pay rate Assembly department overhead per direct labor hour 1 dresser = 20 BF $2 per BF 1 chair = 5 hours; 1 table = 7 hours; 1 dresser = 10 hours $15 per hour $5 Painting process machine hours (MH) Painting department overhead per MH Changeover cost per batch Sales price Fixed Cost 1 chair = 0.5 MH; 1 table = 1.5 MH; 1 dresser = 2 MH $20 1 chair = $100; 1 table = $150; 1 dresser = $200 1 chair $180; 1 table = $270; 1 dresser = $270 $50,000 Variable SG&A Fixed SG&A $5 per unit $25,000 Within your analysis, make sure to include the following: Briefly discuss the advantages and disadvantages of the four costing methods. Narrow the choice down to two cost methods you would most recommend and provide your justification. Demonstrate how each of the two costing methods you chose would allocate overhead and administrative costs by calculating product costs using each method. Justify to the CEO what type of costing method (job- order, process costing, variable costing and/or activity-based costing) you would recommend AFC use. Assume that all of the items produced are sold. Use the following accounting data in your analysis. Production & Cost Description Production & Cost Amounts 5000 chairs/10 batches; 4000 Annual Production tables/20 batches; 3000 dressers/20 batches Raw materials in board 1 chair = 10 BF; 1 table = 15 BF; feet (BF) per unit Raw materials price per unit Assembly labor time (hours per unit) Labor pay rate Assembly department overhead per direct labor hour 1 dresser = 20 BF $2 per BF 1 chair = 5 hours; 1 table = 7 hours; 1 dresser = 10 hours $15 per hour $5 Painting process machine hours (MH) Painting department overhead per MH Changeover cost per batch Sales price Fixed Cost 1 chair = 0.5 MH; 1 table = 1.5 MH; 1 dresser = 2 MH $20 1 chair = $100; 1 table = $150; 1 dresser = $200 1 chair $180; 1 table = $270; 1 dresser = $270 $50,000 Variable SG&A Fixed SG&A $5 per unit $25,000 Within your analysis, make sure to include the following: Briefly discuss the advantages and disadvantages of the four costing methods. Narrow the choice down to two cost methods you would most recommend and provide your justification. Demonstrate how each of the two costing methods you chose would allocate overhead and administrative costs by calculating product costs using each method.