Contribution margin 460,000 Fixed expenses: Advertising. 270,000 Depreciation of equipment (no resale value) 80,000 General factory overhead...... 105,000* Salary of product-line manager.. 32,000 Insurance on inventories.... 8,000 Purchasing department.. 45,000 Total fixed expenses... 540,000
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.
![EXERCISE 10-15 Dropping or Retaining a Segment [LO10-2]
Thalassines Kataskeves, S.A., of Greece makes marine equipment. The company has been experiencing
losses on its bilge pump product line for several years. The most recent quarterly contribution format
income statement for the bilge pump product line follows:
TAKE
TWO
Thalassines Kataskeves, S.A.
Income Statement-Bilge Pump
For the Quarter Ended March 31
Sales..
Variable expenses:
Sales commissions..
Shipping....
$850,000
Variable manufacturing expenses.
$330,000
42,000
18,000
Total variable expenses
390,000
Contribution margin
460,000
Fixed expenses:
Advertising.
270,000
Depreciation of equipment (no resale value)
80,000
General factory overhead..
105,000*
Salary of product-line manager.
32,000
Insurance on inventories..
8,000
Purchasing department.
Total fixed expenses..
Net operating loss..
45,000*
540,000
$ (80,000)
*Common costs allocated on the basis of machine-hours.
*Common costs allocated on the basis of sales dollars.
Discontinuing the bilge pump product line would not affect sales of other product lines and would
have no effect on the company's total general factory overhead or total Purchasing Department expenses.
Required:
Would you recommend that the bilge pump product line be discontinued? Support your answer with appro-
priate computations.
Sales=
exp](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F09dfd795-517a-4fec-8b95-5717a035bef6%2F216bbce0-8557-4da7-91f9-74b943d7f557%2Fro2j0dr_processed.png&w=3840&q=75)
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