1. COST BEHAVIOR ANALYSIS During this pandemic, almost all business lines experienced income instability, as experienced by PIZZA CALIFORNIA. For this reason, the company strives to reduce costs that are not value added. Below are the estimated costs and expenses for period 1 and period 2. Assumption of Relevant Range of 10,000 to 20,000 units. COST /EXPENSE PERIODE I PERIODE IV Unit production/unit sold Direct material used Direct Labor cost Production supervisors salaries Directors salaries Depreciation expense - factory building Depreciation expense - factory equipment 12,000 18,000 45,000 33,000 13,500 26,500 11,500 67,500 49,500 13,500 26,500 11,500 7,700 74,250 7,700 49,500 30,000 25,480 Overtime Premium Marketing person salaries Utilities expense - factory 43.000 34,720 Rent expense - store Property tax - factory 2,700 2,700 2,300 2,300 Indirect labor cost 10,800 16,200 9,000 12,500 7,200 Indirect materials used 6,000 12,500 Advertising expense Freight-in cost Delivery expense 4,800 3,600 5,400 REQUESTED: 1) Explain what is meant by Fixed Cost, Variable Cost and Mixed Cost! Give an example of each of the costs mentioned above 2 each! 2) Describe the method used to separate Mixed Cost! Which method is suitable, if there is cost data like the one above! 3) Construct the overhead function for the company above! 4) If 16,000 units were produced / sold in period III, calculate the overhead costs incurred in the company!
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.
1. COST BEHAVIOR ANALYSIS
During this pandemic, almost all business lines experienced income instability, as experienced by PIZZA CALIFORNIA. For this reason, the company strives to reduce costs that are not value added. Below are the estimated costs and expenses for period 1 and period 2. Assumption of Relevant Range of 10,000 to 20,000 units.
|
COST / EXPENSE |
PERIODE I |
PERIODE IV |
|
Unit production/unit sold |
12,000 |
18,000 |
|
Direct material used |
$ 45,000 |
$ 67,500 |
|
Direct Labor cost |
33,000 |
49,500 |
|
Production supervisors salaries |
13,500 |
13,500 |
|
Directors salaries |
26,500 |
26,500 |
|
|
11,500 |
11,500 |
|
Depreciation expense - factory equipment |
7,700 |
7,700 |
|
Overtime Premium |
49,500 |
74,250 |
|
Marketing person salaries |
30,000 |
43.000 |
|
Utilities expense - factory |
25,,480 |
34,720 |
|
Rent expense - store |
2,700 |
2,700 |
|
Property tax - factory |
2,300 |
2,300 |
|
Indirect labor cost |
10,800 |
16,200 |
|
Indirect materials used |
6,000 |
9,000 |
|
Advertising expense |
12,500 |
12,500 |
|
Freight-in cost |
4,800 |
7,200 |
|
Delivery expense |
3,600 |
5,400 |
REQUESTED:
- Explain what is meant by Fixed Cost, Variable Cost and Mixed Cost! Give an example of each of the costs mentioned above 2 each!
- Describe the method used to separate Mixed Cost! Which method is suitable, if there is cost data like the one above!
- Construct the
overhead function for the company above! - If 16,000 units were produced / sold in period III, calculate the overhead costs incurred in the company!
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