Adarmes Adventures manufactures aluminum canoes. In planning for the coming year, CFO Alexis King is considering three different sales targets: 2,500 canoes, 3,000 canoes, and 3,500 canoes. Canoes sell for $800 each. The standard variable cost information for a canoe is as follows. Direct materials $ 300 Direct labor 150 Variable overhead Utilities 35 Indirect material 30 Indirect labor 60 Total $ 575 Annual fixed overhead cost is expected to be: Maintenance $ 20,000 Depreciation 40,000 Insurance 27,000 Rent 30,000 Total $ 117,000 Prepare a flexible budget for the three sales levels under consideration.
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.
Adarmes Adventures manufactures aluminum canoes. In planning for the coming year, CFO Alexis King is considering three different sales targets: 2,500 canoes, 3,000 canoes, and 3,500 canoes. Canoes sell for $800 each. The
| Direct materials | $ | 300 | ||
| Direct labor | 150 | |||
| Variable overhead | ||||
| Utilities | 35 | |||
| Indirect material | 30 | |||
| Indirect labor |
|
60 | ||
| Total | $ | 575 |
Annual fixed overhead cost is expected to be:
| Maintenance | $ | 20,000 | ||
| 40,000 | ||||
| Insurance | 27,000 | |||
| Rent |
|
30,000 | ||
| Total | $ | 117,000 |
Prepare a flexible budget for the three sales levels under consideration.
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