Case #4 Fairswing Corp. manufactures golf-club bags that sell for $230 per bag. Each month, they could manufacture 9,000 golf bags, although they are currently producing 8,550 bags. Per-unit production costs are as follows: Direct materials Direct labour Variable manufacturing overhead Fixed manufacturing overhead Variable selling cost Per Golf Bag $120.00 $44.00 $11.00 $20.00 $5.00 $200.00 Recently management at Fairswing Corp. was approached by a major company requesting to purchase 400 golf bags for the reduced price of $180 as a one-time only special order. Since the potential customer has approached Fairswing Corp., there will be no variable selling costs associated with the order. (A) Should Fairswing Corp. accept the one-time special order? By how much would income increase or decrease by accepting the order? (B) Before accepting or rejecting the one-time special order, what qualitative factors should the company consider?
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.
Don't give answer in image format
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
