Kellogg’s

Definition

Kellogg’s is a multinational food manufacturing company known for its cereals and convenience foods. It employs various costing methods to manage production costs and pricing strategies.

5 Must Know Facts For Your Next Test

1. Kellogg’s uses Job Order Costing for custom, small-batch production runs and specialty items.
2. Process Costing is used by Kellogg’s for mass-produced products like cereals where costs are averaged over large quantities.
3. Kellogg's managerial accounting involves tracking direct materials, direct labor, and manufacturing overhead.
4. Cost allocation at Kellogg’s helps in determining the profitability of different product lines.
5. Understanding both costing methods allows Kellogg’s to optimize their production efficiency and cost management.

Review Questions

• Which costing method does Kellogg's use for custom, small-batch products?
• How does Process Costing benefit Kellogg's in cereal production?
• What are the three main cost components tracked in Kellogg's managerial accounting?

Related terms

Job Order Costing:

A costing method used to assign costs to specific orders or batches which are unique or customized.

Process Costing:

A costing method that averages costs over continuous units of production usually applied in mass production settings.

Manufacturing Overhead:

Indirect factory-related costs that are incurred when producing a product.