TC Co is manufacturing and selling product M with the following information: Unit sales price = $70 Direct costs per unit: %3D Material = $32 Labour $12 Overheads= $6 %3D Selling and admin= $4 Fixed production overhead is at $1,920,000. Other non-production fixed overhead is $2,080,000. Average manufacturing and selling units is 300,000/year (at 75% production capacity). A customer is placing an order for 100,000 unit of M. This order comes with an additional requirement that items are needed to be packed in batch with cach 20,000 units and the packing cost is estimated at $2,000 per batch. Determine the minimum selling price for this order given that the management expects a profit of $1,600,000 for the year %3!
Process Costing
Process costing is a sort of operation costing which is employed to determine the value of a product at each process or stage of producing process, applicable where goods produced from a series of continuous operations or procedure.
Job Costing
Job costing is adhesive costs of each and every job involved in the production processes. It is an accounting measure. It is a method which determines the cost of specific jobs, which are performed according to the consumer’s specifications. Job costing is possible only in businesses where the production is done as per the customer’s requirement. For example, some customers order to manufacture furniture as per their needs.
ABC Costing
Cost Accounting is a form of managerial accounting that helps the company in assessing the total variable cost so as to compute the cost of production. Cost accounting is generally used by the management so as to ensure better decision-making. In comparison to financial accounting, cost accounting has to follow a set standard ad can be used flexibly by the management as per their needs. The types of Cost Accounting include – Lean Accounting, Standard Costing, Marginal Costing and Activity Based Costing.
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