A Mingoia Company Ltd produced 40,000 lamp poles last year. The following cost data were obtained from 20X7 company records. £ Per unit Direct materials 120,000 3.00 Direct labour 200,000 5.00 Variable overheads 80,000 2.00 Fixed overheads 120,000 3.00 Variable selling admin 40,000 1.00 Fixed selling and admin 80,000 2.00 Sales were £2,500,000 with an average selling price per unit of £62.50. The company's income tax rate last year was 50% and is expected to remain the same next year. Sales in units are expected to remain the same with an increase of 8% in the average selling price. All per unit variable costs are expected to increase by 5%; fixed costs are expected to increase 3%. 30
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.
![A Mingoia Company Ltd produced 40,000 lamp poles last year. The
following cost data were obtained from 20X7 company records.
£
Per unit
Direct materials
120,000
3.00
Direct labour
200,000
5.00
Variable overheads
80,000
2.00
Fixed overheads
120,000
3.00
40,000
1.00
Variable selling admin
Fixed selling and admin
80,000
2.00
Sales were £2,500,000 with an average selling price per unit of £62.50.
The company's income tax rate last year was 50% and is expected to
remain the same next year. Sales in units are expected to remain the same
with an increase of 8% in the average selling price. All per unit variable
costs are expected to increase by 5%; fixed costs are expected to increase
3%.
30
Required:
1. How many poles must Mingoia sell in 20X8 to have a net profit after
taxes of £1,000,000?
2. Will the Mingoia Company achieve the desired operating profit after
taxes of £1,000,000 if sales remain at the same level as 2007? Explain
why or why not](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F5da62daf-3213-48f4-b6e3-b4a7a174c5a6%2Fb07c72de-b1df-420d-aad0-3924b71d81ff%2Fd6h6su9_processed.jpeg&w=3840&q=75)
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