1) Would Universal Robina Corporation be more likely to use process costing or job-order costing? Why?

2. Identify the types of inventory accounts used by URC. Are all these the same or different from what you've learned in the discussions? What evidence supports your conclusion?

3. Identify the accounts in computing the URC's cost of sales. Are all these the same or different from what you've learned in the discussions? What evidence supports your conclusions?

4. What are those manufacturing overhead costs assigned to cost objects? Are all these the same or different from what you've learned in the discussions?

5. From a financial reporting standpoint, why does the company need to assign manufacturing overhead costs to cost objects?

Answer:

1.. Would Universal Robina Corporation be more likely to use process costing or job-order costing? Why?

• Process costing. This is because the products produced by Universal Robina Corporation are mass-produced. Products are similar to each other, and each unit of the product is given the same amount of resources. Therefore, the cost of each product produced is assumed to be the same as the cost of every other product. Thus the more appropriate product costing system to use is that of process costing. Job order costing is for companies where each unit of their product is different from every other product usually due to customer specifications.
• For example, URC produces a certain product called Cream-o. Each unit of Cream-o is similar to other units of Cream-o. They have similar resources, weight, and packaging. This is because the production of Cream-o is homogenous. Homogeneous indicates that the units of output are relatively indistinguishable from one another. Job order costing is better used for those companies where each unit of product is distinguishable from one another. Such as home builders where each house produced is different due to customer specifications, such as floor size, and overall style 

2. Identify the types of inventory accounts used by URC. Are all these the same or different from what you've learned in the discussions? What evidence supports your conclusion?

• URC uses different inventory accounts, namely Raw Materials, Finished Goods, Spare parts and supplies, Containers and packaging materials, Goods in-process. This is similar to what was discussed as this can be seen in Note 11 of the Financial Statement of Universal Robina Corporation, located on Page 72 of the financial statements.

3. Identify the accounts in computing the URC's cost of sales. Are all these the same or different from what you've learned in the discussions? What evidence supports your conclusions?

• URC's cost of sales account consists of raw materials used, direct labor, and overhead costs. When added all together it will give us total manufacturing costs. Then the goods in-process are added to get the cost of goods manufactured. The ending inventory account of finished goods is deducted to get the cost of goods sold. This can be reflected in Note 24 of the Financial Statement of Universal Robina Corporation, located on Page 98.

4. What are those manufacturing overhead costs assigned to cost objects? Are all these the same or different from what you've learned in the discussions?

• Manufacturing overhead costs include utilities, depreciation and amortization, personnel expenses, repairs and maintenance, security and other contracted services, insurance, rental expense, research and development, handling and delivery charges. These overhead costs are the same as what was discussed.
• This is reflected on Page 99 of the financial statements.

5. From a financial reporting standpoint, why does the company need to assign manufacturing overhead costs to cost objects?

• A company would need to assign manufacturing overhead to cost objects because it would be extremely difficult to assign the costs directly to the products. Manufacturing overhead are costs that cannot be directly traceable to a certain product because overhead costs are often shared between different departments of the company or different product or product lines. Despite it not being directly traceable, it is still necessary to produce the products and must therefore be rightfully allocated in order to properly reflect the cost of the product. If a product's cost is not properly identified, a company could end up making the wrong decisions or not properly report the cost on the financial statements which could impact the decision of the users of the financial statement, therefore it is important to properly assign the manufacturing overhead