11. Sell or process further. In producing Ergon, $20 per ton. The company is considering combining additional chemicals with Bygon to produce low-grade fertilizer, to be called Exton, and sold to wholesalers at $12 per 100 pounds. The chemi cals would be added to Bygon at the rate of 40 pounds per 100 pounds of by-product. Additional 250000 100 costs would be: = 25000 Chemicals. Direct labor Variable factory overhead. $7.00 per 100 pounds of input 3.00 per 100 pounds of output 1.50 per 100 pounds of output While present facilities are adequate to produce Exton, $40,000 in additional annual promo- tion and advertising costs would be incurred. The current volume of Bygon is 2,500,000 pounds, or (12-11-5)=) 0.5*25000 12500 1,250 tons. Required: Recommendation to sell Bygon or process further to produce Exton.
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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