You have been hired as a managerial accountant by Mr. Smith of Wilson-West Manufacturing, a start-up company that produces several different product lines. He would like you to set up the cost accounting system for the cabinet division. Listed below are your new job requirements and at least 1 task for each.
Compile a document or 400–600 words with the following requirements:
Types of costs
Explain what types of costs you plan on using to distinguish the different types of cabinets that will be produced.
Examples should include direct costs items, indirect costs items, as well as variable costing.
What are at least 5 types of expenses that are associated with manufacturing the cabinets?
Cost accounting methods
Explain how product costing is used for a cabinet division.
Give 2 examples of how you will use product costing.
Which costing method will you use for the cabinet division: Activity-based costing (ABC), job order costing, or process costing?
Validate your answer with 2–3 reasons for and 2–3 reasons against the other types of costing.
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