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A brief description of the purpose of a product costing system and why it is necessary

Prepare a report (no more than 10-pages in total) for the owners of Seafarer Kayaks that addresses the following:

a) A brief description of the purpose of a product costing system and why it is necessary. Include comments on AASB102 in relation to production costs and refer to the text and other academic literature for information. Make sure you reference all the material. Do NOT use WIKIPEDIA!

b) Prepare a Schedule of Cost of Goods Manufactured and Cost of Goods Sold. (The schedules may be in the appendix). Explain why some cost items have been excluded from the schedules. (Hint: See the reminder from your manager above!)

c) Complete the T-accounts and complete ALL opening and closing balances AND i. Overhead applied during the year; ii. Calculate the total of Actual Indirect/Overhead Costs for the year; iii. Calculate any over- or under-applied overhead based on the actual versus the applied overhead during the year. iv. Complete (and show) the correct journal entry to dispose of any imbalance/differences.

d) Discuss how overheads can be over- or under-applied and how the company should deal with the over- or under-application. Write the JOURNAL to eliminate any imbalance

e) Write a brief analysis of the STANDARD COSTING system and explain how it may help Seafarer Kayaks owners and managers better plan and control their operations. (This will be covered in Week 8 however you can read the material in chapter 10 earlier if you want to finish this report early.)

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