1) Alpha Electric Motors manufactures a single model of all purpose electric motor. Frank Flores, the production manager, has just completed reviewing product cost data for the last year in preparation for the upcoming budget session with top management. Under normal conditions, the company produces 100,000 motors per year and that is considered 100% capacity. Flores is contemplating a look at product costs over a range of potential capacity levels to determine realistic costs per unit for the year. He has arrived at the following budget information: Raw Material Costs per unit $15 Purchased Components per unit 23 Labor Cost per unit (by grade): Grade 1 6 Grade 2 9 Grade 3 12 Variable Factory Overhead 16 Total Fixed Factory Overhead $300,000 Required: a) Prepare budgets for the Total Costs at 50% & 80% b) From the total budgeted production costs in (a) above, calculate: 1. variable cost per unit, 2. fixed cost per unit, and 3. total unit cost for the four (2) capacity.
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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