At normal capacity of 10,000 units per month, C. Siw Company has the following costs: Direct materials P 10 Direct labor 8 Variable overhead 5 Fixed overhead 4 Variable expenses 3 Fixed expenses 2 For the past several months, the company has been operating at only 80% capacity. To utilize idle capacity, the company is thinking of accepting a special order for 2,500 units at P 25 per unit. Normal selling price is P 40 per unit. No expenses will be incurred on the special order. Should the company accept the special order? a. Yes because there is a net advantage of P 5,000. b. No because there is a net disadvantage of P 2,000. c. No because there is a net disadvantage of P 17,500. d. Yes because there is a net advantage of P 2,000.
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.
At normal capacity of 10,000 units per month, C. Siw Company has the following costs: Direct materials P 10 Direct labor 8 Variable
a. Yes because there is a net advantage of P 5,000.
b. No because there is a net disadvantage of P 2,000.
c. No because there is a net disadvantage of P 17,500.
d. Yes because there is a net advantage of P 2,000.
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