CASE

SANDERS CYCLE COMPANY: PROCESS COSTING

Sanders Cycle Company is a family-owned bicycle manufacturing company located in Stow, Ohio.It has two product lines, a road bike, the Tourist, and a high-end racing bike, the Racer.The design for Tourist bicycles is standard for all units.Because of the standard design and the high volume production of the Tourist line, the company uses a process costing system using the First-In-First-Out (FIFO) method to determine unit costs.

Figure 1 provides the flowchart of the production process of Tourist bicycles.A narrative describing the production process is provided below.

Figure 1: Tourist's Production Process

CoursHeroTranscribedText: Figure 1: Tourist's Production Process Department 1 Department 1 Cutting/Welding] Heat Treatment Sanding