Cost Classification (Assignment #1)

Her first action plan was to list all the key products or items that she would need to start the business. Keisha’s list included a conventional oven, a cash register, baking pans, business licenses, health inspections, flour, sugar, baking soda, raisins, butter, eggs and rum. She also planned on hiring her accounting professor on a part time basis to perform bookkeeping services and her nieces Brianna and Alexis, to help her in the bakery. Aunt Sue Ellen would supervise the girls so that Keisha could focus on developing the business. K&J’s cost drivers are provided in Table 1.

Required: Keisha needs your help in classifying the various costs. In order to manage these costs, she wants them identified using the information below. She asked that you use Table 2 (see separate link) for your answers.

a) Behavior (fixed or variable)

b) Traceability (direct or indirect)

c) Financial reporting (product or period)

Costing Systems (Assignment #2)

Keisha discussed the business plan with her accounting professor who agreed to serve as her part time accountant. His first advice was for the business to develop a budget. Since Keisha did not complete Accounting II, she was not aware of the various costing systems that exist in businesses. Her accounting professor told Keisha of the three different types of costing systems that exist in organizations – job order, process costing and activity-based costing.

Required: Which type of costing system is K&L Bakery most likely to use? Discuss.