a) Calculate the weighted average unit contribution margin, assuming a constant sales mix. b) How many units of each printer must be sold to break even? c) i) Explain what is margin of safety
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.
International Printer Machines (IPM) builds three computer printer models: Alpha, Beta, and Gamma. Information for these three products is as follows:
| Alpha | Beta | Gamma | total | |
| Selling price per unit | $250 | $400 | $1500 | |
| variable price per unit | $80 | $200 | $800 | |
| Expected Unit sales (annual) | 12,000 | 6,000 | 2,000 | 20,000 |
| Selling mix | 50% | 40% | 10% | 100% |
Total annual fixed costs are $5,000,000. Assume the sales mix remains the same at all levels of sales.
Required:
a) Calculate the weighted average unit contribution margin, assuming a constant sales mix.
b) How many units of each printer must be sold to break even?
c) i) Explain what is margin of safety
ii) Calculate in sales units the margin of safety for IPM, assuming projected sales are 25,000 units?
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