Christine's Chronographs makes two models of a high-end watch—the model 94 and the model 101. Both models go through a special polishing step that requires the use of the single polishing machine at the company. The price and costs of the two models appear as follows. Model 94 Model 101 Price per watch $ 4,800 $ 9,000 Variable cost per watch $ 2,450 $ 5,100 Polishing hours per watch 2 3 The polishing machine used for both models has a capacity of 21,000 hours annually. Fixed manufacturing costs are $7,450,000 annually. Required: a. Suppose that the maximum annual unit sales that Christine's can achieve is 10,500 units of the Model 94 and 8,000 of the Model 101. How many units of each watch model should Christine's produce annually? b. Suppose that the maximum annual unit sales that Christine's achieve make is 8,500 units of the Model 94 and 5,500 of the Model 101. How many units of each watch model should Christine's produce annually?
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.
Christine's Chronographs makes two models of a high-end watch—the model 94 and the model 101. Both models go through a special polishing step that requires the use of the single polishing machine at the company. The price and costs of the two models appear as follows.
| Model 94 | Model 101 | |||||
| Price per watch | $ | 4,800 | $ | 9,000 | ||
| Variable cost per watch | $ | 2,450 | $ | 5,100 | ||
| Polishing hours per watch | 2 | 3 | ||||
The polishing machine used for both models has a capacity of 21,000 hours annually. Fixed
Required:
a. Suppose that the maximum annual unit sales that Christine's can achieve is 10,500 units of the Model 94 and 8,000 of the Model 101. How many units of each watch model should Christine's produce annually?
b. Suppose that the maximum annual unit sales that Christine's achieve make is 8,500 units of the Model 94 and 5,500 of the Model 101. How many units of each watch model should Christine's produce annually?
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