Question

Boppy is a company that makes lounge pillows for infants. To produce these pillows, the company has two departments: Sewing Department where the pillow cases are stitched and Stuffing Department where the pillows are filled. Your response should include the following: Is this product line a more likely candidate for job order costing or process costing? Identify any direct materials, indirect materials, direct labor, indirect labor, and factory overhead. How might factory overhead be applied? Describe the flow of costs from one process to the next.

Answer 1

As under this , all items are identical. It is preffered to use process costing. Job order is suitable for items or goods that are not similar and incur different costs whereas process costing is for the one where all items have same cost. Direct materials involved are cotton, cloth and indirect material are thread, needle. Direct labor is workers and indirect is manager or supervisor, watchman. Factory overheads are lightning, rent, water, fan etc. These factory overheads must be included in income statements as expenses.

First of all under 1 st process, pillow has to be filled with cotton or feathers and in next process these must be properly sewed by workers.