Your company, a medium-sized manufacturer of widgets, has just held the
annual end of year “State of the Business” meeting for all employees. The
president discussed how well the company has been doing, focusing on presenting
the Income Statement for the last year. During the meeting, he used terms like
product costs, and period costs, and how each affects the
company’s profits. He also announced that going forward, instead of
manufacturing just one standard type of widgets, there will be a new department
added that will make custom versions of the firm’s normal product line.

At the end of the meeting, he asks each supervisor to prepare a memo to his
or her own employees, describing in layman’s terms the following concepts:

• What are the differences between product and period costs?
• Why is it important to properly distinguish one type of cost from the
  other?
• Where on the firm’s income statement will period costs usually show up?
• Where on the firm’s income statement would product costs end up?
• The new department will make use of a job order costing system. How and why
  will this differ from the current process costing system used elsewhere in the
  plant?
• Provide 2 examples of companies that would use:
  • job order costing
  • process costing
  • explain your answers

In your own words, please post a response to the Discussion Board and
comment on other postings. You will be graded on the quality of your
postings.

The following grading criteria will be used: