Target Company: Series of Production Process Assignment
Case assignment: Ethics and the Manager The case is a formal paper 5 to 8 pages long (it can be 3 pages). There is no title page, notable of contents, and no list of references or appendix. The papershould be formatted using APA style. It is due at the end of the fourthmodule (or week) of the course.Target Company is a manufacture company that makes shoes. OnceTarget Company designs the show, reviews the design and finalized it,the fabric is cut and shaped to the pre designed specificationsrequired for the Shoes. Further, another machine thins the edges sovarious pieces are easier to sew together.Required:1-Discuss several production methods and the different accountingsystems each requires that Target Company may use.2. Discuss the cost accumulation process for a Target Company. Is itdifferent for a service organization?3. Explain the reasons product cost information is important forTarget Company managers.4. How does the Work-in-Process account both describe thetransformation of inputs into outputs in Target Company and how Target Company account for the costs incurred in the process?1 / 25. The accounting for Target Company must be familiar with thecalculations of total manufacturing costs and cost of goodsmanufactured. Describe the three categories of manufacturing costs.What is the difference between total manufacturing costs and cost ofgoods manufactured?6. Target Co. had the following beginning and ending inventorybalances for the year ended December 31,2014:January 1, 2014 December 31, 2014Materials $19,500 $ 8,100Work in Process $24,000 $13,500Finished Goods $22,500 $14,500In addition, direct labor costs of $31,000 were incurred, overheadapplied $48,000, materials purchased were $25,500 and selling andadministrative costs were $22,000. Target Co. sold 25,000 units ofproduct during the year at a sales price of $5.00 per unit.Calculate the amount of Cost of Goods Manufactured for the year
Company Analysis Student’s Name
Institutional Affiliation
Company Analysis
Question 1
Target Company is a manufacturing company that makes shoes, and this prompt it to carry out a series of production process to produce finished products. The production process is set in stage by stage form as it entails steps such as shoe designing, design review, fabric cutting, as well as shoe specification. For these reason, Target Company can adopt popular methods of production to produce the right and quality shoes. Thus the company may use the three primary methods of production namely, batch production, job production and flow production method (Maher, Stickney, & Weil, 2012)
Batch production method is applicable as it involves making products in distinct separate groups. Particularly, this allows the shoes to in every batch to pass through the all individual production stages of production stages (Maher, Stickney, & Weil, 2012). Another reason that make this method applicable to Target Company is that the shoes are produce are identical as this can also allow specialization and customization of this products. Since this method allows the company to use division of labor, this also enables the company to enjoy economies of scale (Duchac, Warren, & Reeve, 2011).
The accounting system applicable to batch production method is batch costing, a system that entails the identifying and assigning of cost associated with production a set amount of products. The system is applicable because, under batch processing, each set of products are of identical units but the nature of the batch can be different, which is insignificant (Duchac, Warren, & Reeve, 2011). Another factor is that the cost incurred at each batch can be identified against each batch number, for instance, the requisite shoe material can be coded to match to a specific batch number to ensure a correct batch is charged to the actual cost of material used (Duchac, Warren, & Reeve, 2011).
Another method the company may use is flow production. The method can be useful in the later stages of shoe production as it applicable when shoes at finishing stage moves from one stage to another as soon as they do not require other additional products (Maher, Stickney, & Weil, 2012). This approach will be suitable for Target Company as it is capable of facilitating the productions of large quantity of shoes within a short period, Another reason that makes thus approach beneficial to Target Company is that the methods incurs lower level costs of production and quantity and quality tend to be more consistent than other methods of production (Duchac, Warren, & Reeve, 2011).
The accounting system applicable to flow production method is the process costing method. Process costing methods is the continuous operations that is used in a case where products are similar (Duchac, Warren, & Reeve, 2011). This process is applicable to this method because the shoes are passed into different stages before they are converted into finished shoes. Since the units are there is a flowing production of similar products and the cost incurred with individual unit cannot be differentiated, the technique assumes that the cost associated with each batch are the same (Warren, Reeve, & Duchac, 2016). Under this concept, the cost of production are carried forward over a period before they are summarized and allocated to other units produced (Duchac, Warren, & Reeve, 2011).
The last production method that Target Company can employ in its production process s mass production method. Job production method refers to a technique that is applicable when a company is specialized in manufacturing a single type of products. This approach ensures a batch of the products are completed before the next one is started. In other words, one batch is completed at any one time. However, the approach is perceived as highly costly as it tends to incur high unit cost due to its time consuming aspect as well as its high intensive labor.
The Accounting system applicable to this method is Job costing, an accounting technique that involves accumulation of labor, overhead for a specific job and costs of materials (Maher, Stickney, & Weil, 2012). Through this technique, Target’s cost accountant can determine cost accumulated at a small unit’s level. For instance, the accountants can determine the material cost, labor cost and overhead costs incurred in each unit of production as well as their relevant costing to jobs.
Question 2
Target Company is a product oriented organization as it specializing in shoe manufacturing activity, Costa accumulation process in a product oriented company can adopt the two main of method of cost accumulation namely, process costing system and job order system (Maher, Stickney, & Weil, 2012). Under job order costing procedure, products material, labor and overhead costs are treated as units of accounting which are assigned by means of job order numbers. For instance, while processing the shoes, several activities or batches might be under processing in the factory at the same time (Maher, Stickney, & Weil, 2012). Thus, a job order cost sheet is created and assigned with a job number that are coded to material requisition, overhead incurring and labors in relation ...