ABC Pumps is a division of ABC Controls. The division manufactures and sells a pump in a variety of applications. During the coming year, it projects the following sales: 25,000 units $17 per unit The manager is considering producing either this level or 10,000 units more. The following information is available to help in the decision: 0 Beginning Inventory 25,000 Expected Sales in Units $17.00 Expected Sales Price per Unit $6.00 Variable Manufacturing Cost per Unit $140,000 Total Fixed Manufacturing Overhead $5.60 Fixed Manufacturing Costs $4.00 Fixed Manufacturing Costs (Plus 10,000 Units) $11.60 Total Manufacturing Costs Including Fixed $10.00 Total Manufacturing Costs Including Fixed (Plus 10.000 Units) $37,000 Selling and Admin Costs (All Fixed) Instructions A Prepare an absorption costing income statement showing results for both levels of production. B. Why is income different for the two production levels when the sales levels are the same, either way?
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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