breakeven point in unit sales and dollars
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.
Multiproduct CVP and decision making. Crystal Clear Products produces two types of water filters.
One attaches to the faucet and cleans all water that passes through the faucet. The other is a pitcher-cumfilter
that only purifies water meant for drinking.
The unit that attaches to the faucet is sold for $90 and has variable costs of $25.
The pitcher-cum-filter sells for $110 and has variable costs of $20.
Crystal Clear sells two faucet models for every three pitchers sold. Fixed costs equal $1,200,000.
1. What is the breakeven point in unit sales and dollars for each type of filter at the current sales mix?
2. Crystal Clear is considering buying new production equipment. The new equipment will increase fixed
cost by $208,000 per year and will decrease the variable cost of the faucet and the pitcher units by $5 and
$10, respectively. Assuming the same sales mix, how many of each type of filter does Crystal Clear need
to sell to break even?
3. Assuming the same sales mix, at what total sales level would Crystal Clear be indifferent between using
the old equipment and buying the new production equipment? If total sales are expected to be 24,000
units, should Crystal Clear buy the new production equipment?
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