Question

Detailed Instructions:

In a business setting, we are often asked to write a memo to communicate with internal and external professionals. This assignment further advances your communications within an organization through the use of a memo.

Background: As the senior accountant at Jackson Quality Sportswear (JQS), which manufactures sport attire for men, women, youth, and children, you are responsible for assisting with employee related questions. JQS manufactures sport attire for men, women, youth, and children in bulk quantity on the same type of product. However, Jonathan Cain, sales department manager, is considering taking special orders in an effort to further advance sales. If this is possible, he would like to begin with the youth sport attire as a pilot project. The sport attire itself would remain the same; however, the client would have the option of customizing certain features such as printing and lettering. Jonathan has asked you: -Can you explain if it is possible for production and accounting to manage the youth pilot project? What type of processing (costing system) would this be called? Explain the process. -What would the difference in the costing system be, if any, from what it is now? -What additional documentation would be needed for the custom work? -Would you have any thoughts or concerns on this type of change in processing? In consideration of the background, prepare a memo in a Word document to submit to the sales department manager, Jonathan Cain, with a cc to the controller.

1. Yes, it is possible for the Sales Department along with the Account Department to manage the youth pilot project with the help of Budgeting the manufacturing of Youth Pilot project. Usually, an implementation of Production Budget process is an estimate of units to be produced and is based on sales projections plus an estimate of desired quantity of finished goods at the end of a particular period. This can be in months or years. Here in this scenario, the development of sales to be made in units will follow the preparation of a production budget. There will be three estimated aspects to commence the budget for the special orders. These are the number of additional units to be manufactured, raw materials required for the same, and additional Direct Labor and Overheads. Each of them is essentially required to prepare an estimate or a budget. The entire process of manufacturing the tailor-made youth attire for the client can be termed as Job Order Costing. This is due to the fact that it involves the detailed accumulation of production that attributes cost to custom-designed youth attire with lettering and printing.

2. A job costing system is more expensive to deal than a basic process costing system. This is due to a cost being associated with assigning the individual material and labor to the product. Thus, a job costing system is used for custom jobs when it is easy to determine the cost of materials and labor used for each job. A process costing system is often less expensive to maintain and works best when items are identical and it is difficult to trace the exact cost of materials and labor to the final product. Initially, At JQS, we assume there will be practice of Process Costing whereby the manufacturing of Sportswear for Men, Women, Kids, and Youth will be in large quantities being identical units with the only difference in size, etc. However, after taking up the special orders for the clients for youth attire the processing system of additional customized orders will shift to Job Costing process.

3. The additional documents that will be required for the custom designed youth attire: a) Number of additional units of Youth Attire to be manufactured b) List of Letters to be printed on each of the attire. b) Print Designs d) Cost estimate of the special orders of Youth Attire.

4. Process costing and job order costing are both acceptable methods for tracking costs and production levels. Some companies use a single method, while some companies use both, which creates a hybrid costing system. The system a company uses depends on the nature of the product the company manufactures.

Answer 1

Page-1 - Answer According to the given question, the answer - provided below as follows: a) Yes, it is possible for sales department along with the account department to manage the youth pilot project with the help of budgeting the manufacturing of youth - pilot project b) at the hand of such an implementation of production budget process is an estimate of units to be produced and is based on sales projections plus an estimate of desired quantity of finished goods at the end of a particular period. 1. Here in this scenario of JQs, the preperation of production budget will be followed by development of projection of sales to be made in units by Jonathan The entire process of manufacturing the tailor- made youth attire for the client can be termed as job order costing as it involves the detailed accumulation of production cost attributable to custom-

Page-2 designed youth attire with printing and lettering 6 A job costing system is often more expensive to maintain than a basic process costing system, since there is a cost associated with assigning the individual material and labour to the product. Thus a job costing system is used for custom pobs when it is easy to dertermine the cost of materials and labour used for each Tob. Initially at JQS, we assume there will be practice costing whereby the manufacturing of sportswear for men, wowen, kids and youth will be in large quantities being identical units with the only difference in size, etcong however after taking up the special orders for the clients for youth attive process system of additional customised orders will shift to job costing process.

page-3 o The additional documents to be required for the custom designed youth attite:- sal Number of additional units of youth attire to be manufactured b List of letters to be printed. c) Print designs d) cost estimate of the special orders of yoth attire. ① Process costing and job order costing are both acceptable methods for tracking costs and production levels. Some companies use a single methode while some companies use both which creates a hybrid costing system the system a compony uses depends on the nature of the product the company manufactenses. JQs, there is a change or upgrade in manufacturing of sports Wear.