Belmain Co. expects to maintain the same inventories at the end of 20Y7 as at the beginning of the year. The total of all production costs for the year is therefore assumed to be equal to the cost of goods sold. With this in mind, the various department heads were asked to submit estimates of the costs for their departments during the year. A summary report of these estimates is as follows: Estimated Estimated Variable Cost Fixed Cost (per unit sold) Production costs: Direct materials $15 Direct labor 10 Factory overhead $609,600 8 Selling expenses: Sales salaries and commissions 126,700 3 Advertising 42,900 Travel 9,500 Miscellaneous selling expense 10,500 3 Administrative expenses: Office and officers' salaries 123,800 Supplies 15,200 1 Miscellaneous administrative expense 14,360 Total $952,560 $42 It is expected that 11,760 units will be sold at a price of $168 a unit. Maximum sales within the relevant range are 15,000 units.
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.
2. What is the expected contribution margin ratio? Round to the nearest whole percent.
3. Determine the break-even sales in units and dollars.
4. Construct a cost-volume-profit chart on your own paper. What is the break-even sales?
5. What is the expected margin of safety in dollars and as a percentage of sales? (Round to the nearest whole percent.)
6. Determine the operating leverage. Round to one decimal place.
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