PART 2: Costing Systems (Chapter 4 & Topic Focus 2) 10 Points Jamie 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 Jamie did not complete her Accounting Degree, she was not aware of the various costing systems that exist in businesses. Her accounting professor told Jamie of two of the many different types of costing systems that exist in organizations - job order and process costing. Required: Which type of costing system is J&J Bakery most likely to use? Explain why this is the case? J&J Bakery, Inc. - Business Background As she sat in her Accounting l class bored while listening to the lecture on journal entries, Jamie Jones could not imagine being an accountant in the future. As a young irl, she remembered sitting in the kitchen while her mom and aunts baked those delicious Jamaican black cakes. She remembered that the cakes sold very quickly especially at Christmas time and that people were traveling from as far away as Florida to buy them. Her mom learned to bake from her mother, and she wrote down the cake recipes in case Jamie or one of her siblings decided to follow in her footsteps. However, Jamie chose to follow in her dad's path and so she enrolled in college with plans to become an accountant. Her two older sisters where already studying to be a lawyer and a dentist Jamie had an epiphany as she sat in class, she would leave school at the end of the semester to open up a bakery specializing in Jamaican black cakes. Jamie anticipated that most of her business would be based on special order, customized cakes. She anticipated selling cakes for family weekend gatherings, birthday and wedding celebrations, and holiday gathering. She wanted to have a few cakes available in a store to appeal to the drop in customer In December 2014 Jamie followed her plans, she dropped out of college, created a business plan, and incorporated as the J&J Bakery Inc. (J&J). The first J is in honor of her mom Jezebel who passed away earlier in the year. Jamie planned to open her business on January 1, 2015. She would use the $50,000 inheritance from her mom as start-up capital and receive a minimal salary of $500 per month for the first year of Page | 2 J&J Bakery, Inc. Project- Part 1 business. Uncle David, a marketing executive with a national bank, agreed to provide her with marketing support pro-bono. Jamie found the perfect location for her business. A take-out restaurant on the busy intersection of Jamaica and Hillside Avenues in Queens, NY, became available after a bitter divorce between the owners. The landlord was impressed with Jamie's vision and agreed to pay for all renovations and charge her $600 per month for rent. TABLE 2: COST Classification Chart DM Items & Ingredients Oven Cash register Baking pans Business license Health inspections Rent Utilities Mobile Phone Flour Sugar Baking soda Butter Raisons Eggs Rum Others Accountant Brianna Alexis Jamie Aunt Ellen Fixed Variable DirectIndirect Product DL MOH Period PART 2: Costing Systems (Chapter 4 & Topic Focus 2) 10 Points Jamie 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 Jamie did not complete her Accounting Degree, she was not aware of the various costing systems that exist in businesses. Her accounting professor told Jamie of two of the many different types of costing systems that exist in organizations - job order and process costing. Required: Which type of costing system is J&J Bakery most likely to use? Explain why this is the case? J&J Bakery, Inc. - Business Background As she sat in her Accounting l class bored while listening to the lecture on journal entries, Jamie Jones could not imagine being an accountant in the future. As a young irl, she remembered sitting in the kitchen while her mom and aunts baked those delicious Jamaican black cakes. She remembered that the cakes sold very quickly especially at Christmas time and that people were traveling from as far away as Florida to buy them. Her mom learned to bake from her mother, and she wrote down the cake recipes in case Jamie or one of her siblings decided to follow in her footsteps. However, Jamie chose to follow in her dad's path and so she enrolled in college with plans to become an accountant. Her two older sisters where already studying to be a lawyer and a dentist Jamie had an epiphany as she sat in class, she would leave school at the end of the semester to open up a bakery specializing in Jamaican black cakes. Jamie anticipated that most of her business would be based on special order, customized cakes. She anticipated selling cakes for family weekend gatherings, birthday and wedding celebrations, and holiday gathering. She wanted to have a few cakes available in a store to appeal to the drop in customer In December 2014 Jamie followed her plans, she dropped out of college, created a business plan, and incorporated as the J&J Bakery Inc. (J&J). The first J is in honor of her mom Jezebel who passed away earlier in the year. Jamie planned to open her business on January 1, 2015. She would use the $50,000 inheritance from her mom as start-up capital and receive a minimal salary of $500 per month for the first year of Page | 2 J&J Bakery, Inc. Project- Part 1 business. Uncle David, a marketing executive with a national bank, agreed to provide her with marketing support pro-bono. Jamie found the perfect location for her business. A take-out restaurant on the busy intersection of Jamaica and Hillside Avenues in Queens, NY, became available after a bitter divorce between the owners. The landlord was impressed with Jamie's vision and agreed to pay for all renovations and charge her $600 per month for rent. TABLE 2: COST Classification Chart DM Items & Ingredients Oven Cash register Baking pans Business license Health inspections Rent Utilities Mobile Phone Flour Sugar Baking soda Butter Raisons Eggs Rum Others Accountant Brianna Alexis Jamie Aunt Ellen Fixed Variable DirectIndirect Product DL MOH Period