Accounting
To:
From:
Subject: Case S2-1 assignment
Date:
Memo
I watched How It’s Made and chose to tell you about artificial limbs. Job order costing is appropriate to use since artificial limbs are specially made for certain people of all different shapes, sizes and colors so each limb is unique. This company would need a cost system because there are many different steps needed to create the limb. A manager would need to decide how much each individual person who spent time making the limb would get paid. They could get paid by the hour or by how many limbs they complete in one day. A manager would also need to decide how many people it would take to complete each task. Some jobs might be quicker if two people worked together instead of one.
One direct cost would be the use of the cutting machine used to carve out the positive mold of the artificial limb. This can be tracked by checking the time at which the machine was used and when the carving process started and ended. Another direct cost would be the use of the liquid resent that is made of either polyester or acrylic. This can be tracked by knowing what color was used and when it was used. Not everyone has the same skin tone so that makes it easier to track. Also having the name of the person it is for would be helpful as well.
An indirect cost of making the artificial limb would be the sand paper and files used to refine and smooth the surface of the plaster copy of the residual limb. They might go through two or three sheets of sand paper which might be impossible to track. The blade that is used to carve out the original mold would also be considered an indirect cost since blades are made by the dozen and do not have a serial number or anything to help identify them. The fabric socks used during the lamination process would also be an indirect cost since they use about seven socks and then place the liquid resent all over them. After that process is done those socks will have no way of being tracked
From:
Subject: Case S2-1 assignment
Date:
Memo
I watched How It’s Made and chose to tell you about artificial limbs. Job order costing is appropriate to use since artificial limbs are specially made for certain people of all different shapes, sizes and colors so each limb is unique. This company would need a cost system because there are many different steps needed to create the limb. A manager would need to decide how much each individual person who spent time making the limb would get paid. They could get paid by the hour or by how many limbs they complete in one day. A manager would also need to decide how many people it would take to complete each task. Some jobs might be quicker if two people worked together instead of one.
One direct cost would be the use of the cutting machine used to carve out the positive mold of the artificial limb. This can be tracked by checking the time at which the machine was used and when the carving process started and ended. Another direct cost would be the use of the liquid resent that is made of either polyester or acrylic. This can be tracked by knowing what color was used and when it was used. Not everyone has the same skin tone so that makes it easier to track. Also having the name of the person it is for would be helpful as well.
An indirect cost of making the artificial limb would be the sand paper and files used to refine and smooth the surface of the plaster copy of the residual limb. They might go through two or three sheets of sand paper which might be impossible to track. The blade that is used to carve out the original mold would also be considered an indirect cost since blades are made by the dozen and do not have a serial number or anything to help identify them. The fabric socks used during the lamination process would also be an indirect cost since they use about seven socks and then place the liquid resent all over them. After that process is done those socks will have no way of being tracked