Consider the following information for Cobalt Company: Total fixed costs $150,000 Unit selling price $50 Cost Driver Data About Variables Unit Variable Cost Level of Cost Driver Units sold $30 - Setups 1,200 25 Engineering hours 40 1,100 Using the activity-based costing (ABC) equation, the units that must be sold to earn an operating income of $25,000 are: a.12,640 units. b.12,540 units. c.12,450 units. d.12,750 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.
Consider the following information for Cobalt Company:
| Total fixed costs | $150,000 |
| Unit selling price | $50 |
Cost Driver |
Data About Variables Unit Variable Cost |
Level of Cost Driver |
| Units sold | $30 | - |
| Setups | 1,200 | 25 |
| Engineering hours | 40 | 1,100 |
Using the activity-based costing (ABC) equation, the units that must be sold to earn an operating income of $25,000 are:
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