GROUP ASSIGNMENT

Cost Accounting
Students’ Names: Đỗ Duy Quân, Hứa Phương Nam, Lê Việt Dũng
Instructor: Associate Professor Dr.Nguyễn Thị Thu Liên
Date: May 10, 2023
 ABSTRACT
Sweetie Cookie Company is a well-established confectionery business renowned for its
delectable assortment of cookies. With a commitment to delivering unparalleled quality and
taste, Sweetie Cookie Company has captured the hearts and palates of cookie enthusiasts
worldwide. This company uses a combination of market research, customer surveys, and internal
data analysis to understand consumer preferences, buying patterns, and feedback on Sweetie
Cookie Company's products; also analyzes industry trends, competitors, and market dynamics to
ensure a comprehensive understanding of the market and consumer preferences. To produce
high-quality cookies, Sweetie Cookie Company's commitment to using high-quality ingredients
and maintaining strict quality control measures contributes to its reputation for exceptional taste
and consistency. In conclusion, Sweetie Cookie Company's success can be attributed to its
unwavering commitment to delivering exceptional cookies that satisfy a wide range of consumer
preferences
Introduction

Starting a cookie business can be a profitable venture if executed properly. As the owner of the
specialty cookie business, the aim is to sell only one type of cookie with two employees. The
report focuses on the costing and sales information of producing 1,000 cookies using job order
costing and process costing. In addition, the report analyzes the differences between the two
costing methods and their importance. Finally, the report examines the variances in production
and the effect on costs and revenue for the cookie business.

Part 1: SWEETIE COOKIE COMPANY

 Name of the company: SWEETIE COOKIE

Sweetie Cookie means that bring everyone around the world happiness when enjoy our cookie
with the intention of shining and becoming an outstanding brand in making cookie

 Mission statement: To bake the best and healthiest cookies ever. By using premium
ingredients in every freshly baked treat and offering excellent customer service and giving back
to the community by giving to different charities.
 Location: 209 Giai Phong street, Hai Ba Trung, Ha Noi
 Type of cookie: Chocolate Cookie.

Part 2: Costing and Sales Information, Production of 1,000 cookies

Part 3: Compare and Contrast Costing Methods

The two costing systems examined in this project are job-order costing and process costing.
While both methods have their own advantages and disadvantages, they are designed to provide
accurate information about the cost of producing a product. In this section, we will compare and
contrast the two costing methods and discuss which one gives more complete costing
information and why.
Job-order costing is a system where the costs of each product are recorded separately. In this
system, costs are accumulated by job or by order. Each order has a unique number, and all costs
related to that order are recorded and tracked separately. Job-order costing is useful when
producing customized products or products with specific characteristics. This system is
especially beneficial for businesses that produce products with low production runs, like our
specialty cookie business.

Process costing, on the other hand, is a system where the costs of a product are allocated to the
processes that are involved in producing it. This system is used when producing large quantities
of identical products, such as cookies. The costs of producing cookies are recorded in each
department, and the total cost is allocated based on the number of units produced. The main
advantage of process costing is that it is more efficient than job-order costing, as it allows
businesses to produce large quantities of products quickly and at a lower cost.

Both job-order and process costing provide important information for businesses to make
decisions regarding the pricing and production of products. However, job-order costing provides
more complete costing information as it tracks the costs of each order separately. It provides
information on direct materials, direct labor, and overhead costs for each order, which helps
businesses to make more informed decisions about pricing and production. Job-order costing
also provides more detailed information about the cost behavior of each order, which can be
useful in making decisions about how to allocate resources.

Product costs and conversion costs are important in both costing systems. Product costs include
direct materials, direct labor, and manufacturing overhead. Direct materials are the costs of the
raw materials used to make the product. Direct labor is the cost of the labor used to produce the
product, while manufacturing overhead includes all other costs incurred during production, such
as rent, utilities, and depreciation.
Conversion costs, on the other hand, include direct labor and manufacturing overhead.
Conversion costs refer to the cost of converting raw materials into finished goods. This includes
the cost of labor and overhead needed to transform the raw materials into finished products.
Conversion costs are important because they represent the cost of the production process, which
is necessary to determine the total cost of producing the product.

In conclusion, while both job-order costing and process costing have their own benefits and
limitations, job-order costing provides more complete costing information by tracking the costs
of each order separately. Both product costs and conversion costs are important in both costing
systems as they represent the cost of producing a product. Understanding the differences between
these costing methods is crucial for businesses to make informed decisions about pricing and
production.

For this specialty cookie business, we believe that job-order costing would be more useful than
process costing. This is because the business produces only one type of cookie, and the
production runs are relatively small. Job-order costing is best suited for businesses that produce
products with specific characteristics or low production runs, such as customized products or
specialty items.

With job-order costing, the costs of each order are tracked separately, allowing the business to
determine the cost of producing each batch of cookies. This information is important for setting
the price of the cookies and determining the profitability of each batch. Job-order costing also
provides detailed information on the cost behavior of each order, allowing the business to
identify areas where costs can be reduced or optimized.

Part 4: Impact of Increase and Decrease in Costs, and Sales

Conclusions and Recommendations:

In conclusion, the establishment of a cookie business requires careful consideration of various
factors, including product costing methods and changes in production. The job order costing and
process costing methods both provide valuable information for decision-making purposes.
However, the process costing method may be more suitable for this particular business due to the
nature of its production process and the need to accurately track costs and revenues for each
department.

By examining the costs and revenues associated with different levels of production, we can see
the impact that changes in output have on the profitability of the business. It is crucial to closely
monitor these variances in production and make adjustments as necessary to ensure the business
remains viable and profitable.

Furthermore, the success of the cookie business also depends on effective marketing strategies,
customer satisfaction, and continuous improvement in product quality and efficiency. In
summary, the key to running a successful cookie business is to pay attention to every detail and
make informed decisions based on accurate and up-to-date accounting data.
 References

1. Srikant M. Datar & Madhav V. Rajan, R. (2021), “Horngren’s Cost Accounting (17th
Global Edition)”, Pearson.

2. Lê Kim Ngọc, R. (2022), “Giáo trình Kế toán chi phí”, Đại học Kinh tế Quốc dân

3. Drury, R. (2021), “Management and Cost Accounting”, Business Press Thomson

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