Consider the following information for company XYZ (shoe manufacturer): The relevant range is 7,000 units to 10,000 units. When it produces 10,000 units, the unit costs are as follows: Direct Material $5.00 Direct Labour $3.00 Variable Manufacturing Overhead $1.50 Fixed Manufacturing Overhead $3.50 Fixed Selling Expenses $4.00 Fixed Administrative Expense $2.00 Sales Commissions $0.75 Variable Administrative Expense $0.25 2.1 Calculate the total product cost incurred to make 10,000 units. 2.2 Calculate the total variable product costs per unit 2.3 If 8,000 units are sold, what is the total variable cost
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 company XYZ (shoe manufacturer):
The relevant range is 7,000 units to 10,000 units. When it produces 10,000 units, the unit costs
are as follows:
Direct Material $5.00
Direct Labour $3.00
Variable Manufacturing
Fixed Manufacturing Overhead $3.50
Fixed Selling Expenses $4.00
Fixed Administrative Expense $2.00
Sales Commissions $0.75
Variable Administrative Expense $0.25
2.1 Calculate the total product cost incurred to make 10,000 units.
2.2 Calculate the total variable product costs per unit
2.3 If 8,000 units are sold, what is the total variable cost
2.4 If 8,000 units are sold, what is the total fixed cost
2.5 If 9,000 units are sold, what is the total product cost
2.6 If 9,000 units are sold, what is the total period cost
2.7 What is the incremental cost to increase production from 8,000 to 8,001
2.8 If the selling price per unit is $25, what is the gross margin per unit. What is the gross.
margin when 8,500 units are sold?
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