1. Costing System
Jack's mother, the accountant, told him about the three different types of costing methods that organizations use to classify costs, including job order, process costing and activity based costing.
- Which method would you recommend that Jack's Gluten-Free Pizza Company use? Please explain.
TABLE: COST INFORMATION
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Supplies
|
Cost
|
Standard per pizza
|
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Pizza Oven
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Donated by Jack's Father
|
|
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Cash Register
|
$10/month (3 year contract)
|
|
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Refrigerator and Other appliances
|
$0 (already included in rented space)
|
|
|
Gluten-Free Pizza Crust
|
$100 for 50 crusts
|
1 crust
|
|
Organic Sauce
|
$10.00 for 20 cups
|
1/2 cup
|
|
Organic Cheese Blend
|
$2.00 for 2 cups
|
1/2 cup
|
|
Assorted Spices
|
$18.75 for 5 lbs ($0.05/tsp)
|
1 tsp
|
|
Labor
|
Cost
|
Standard
|
|
Salary - Jack
|
$250/month
$50/training day
|
|
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Salary - Chef
|
$2,000/month
|
|
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Salary - 2 Employees
|
$600 each /month
|
|
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Marketing
|
$100/month
$1.00/pizza
|
|
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Accountant
|
$150/month
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|
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Overhead
|
|
|
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Phone
|
$5/month
|
|
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Utilities (Electric, Gas, and Water)
|
$225/month
|
|
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Rent
|
$1050/month
|
|
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Estimated Variable MOH
|
$2.00/pizza
|