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Research Assignment: Process Costing and Job-Order Costingprocess Costing

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Research Assignment: Process Costing and Job-Order Costingprocess Costing

Research Assignment: Process Costing and Job-Order CostingProcess Costing

Hershey's Company

The Hershey's Company is the largest producer of quality in North America and a global leader in chocolate and sugar confectionery. Founded in 1894 by Milton S. Hershey and headquartered in Hershey, PA, has operations throughout the world and more than 12,000 employees. With revenues of more than $5 billion, Hershey offers such iconic brands as Hershey's, Reese's, Hershey's Kisses, Kit Kat, Twizzlers and Ice Breakers as well as the smooth, creamy indulgence of Hershey's Bliss chocolates.

Principal products include chocolate and confectionery products, foods and beverage enhances, such as baking ingredients, toppings and beverages; and gum and mint refreshments products. Cocoa products are the most significant raw materials used to produce their chocolate products. Cocoa products including cocoa liquor, cocoa butter and cocoa powder processed from cocoa beans, are used to meet manufacturing requirements. Cocoa products are purchased directly from third party suppliers.

According to the annual report of 2008, cocoa futures contract prices increased sharply compared with 2007 and 2006, and traded in a range between $.86 and $1.50 per pound, based on the Intercontinental Exchange futures contract. Dairy prices came down from unprecedented highs set in 2007, starting he year at nearly $.20 per pound and dropping to $.15 per pound on a class II fluid mil basis, sugar supplies in the U.S. were negatively impacted by a catastrophic explosion at a sugar cane refinery in Georgia and by smaller sugar beet crop. As a result, refined sugar prices increased from $.29 to $.45 per pound. Peanut prices in the U.S. began the year around $.63 per pound, but gradually increased during the year to $.76 per pound due to supply tightness driven by a below average crop during the previous year. Almond prices began the year at $2.25 per pound and declined to $1.90 per pound during the year driven by supply increases reflecting a record crop which produced 9% more volume than a prior year.

As we can see Process Costing works better in Hershey's Company, because this company not depends of the customer orders. They manufacture the same quantity of chocolates each day, because they have fixed places that sell their products around the world.

Job-Order Costing


Thomson-Shore was founded by Ned Thomson and Harry Shore in 1972. It is an employee-owned company specializing in all books for big and small publishers. In the book manufacturing industry, Thomson-Shore is leading the way with with "green press" initiatives. It is located in Dexter, MI and is 100% employed-owned, so the person who answer the customer is owner along the press operator, the bindery assistant, the shipping clerk, the IT expert, and the rest of the Thomson-Shore staff.

At Thomson-Shore the various cost pools are: labor cost: $10.50/ hour, technical cost $17.00/ hour (computer, calculator, Xerox machine and

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