Beantown Baseball Company makes baseballs that sell for $13 per two-pack. Current annual production and sales are 576,000 baseballs. Costs for each baseball are as follows: Direct material $2.00 Direct labor $1.25 Variable overhead $0.50 Variable selling expenses $0.25 Total variable cost $4.00 Total fixed overhead $750,000 i. Beantown Baseball Company has received an offer to provide a one-time sale of 12,000 baseballs at $8.80 per two-pack to the Lowell Spinners. This sale would not affect other sales, nor would the cost of those sales change. However, the variable cost of the additional units would increase by $0.20 for shipping, and fixed cost would increase by $3,600. Based solely on financial information, should the company accept this offer? Incremental pre-tax loss $______ The company should Reject the offer
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.
Beantown Baseball Company makes baseballs that sell for $13 per two-pack. Current annual production and sales are 576,000 baseballs. Costs for each baseball are as follows:
| Direct material | $2.00 |
| Direct labor | $1.25 |
| Variable |
$0.50 |
| Variable selling expenses | $0.25 |
| Total variable cost | $4.00 |
| Total fixed overhead | $750,000 |
i. Beantown Baseball Company has received an offer to provide a one-time sale of 12,000 baseballs at $8.80 per two-pack to the Lowell Spinners. This sale would not affect other sales, nor would the cost of those sales change. However, the variable cost of the additional units would increase by $0.20 for shipping, and fixed cost would increase by $3,600. Based solely on financial information, should the company accept this offer?
Incremental pre-tax loss $______
The company should Reject the offer
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