Cullumber Company manufactured 5,040 units of a component part that is used in its product and incurred the following costs: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead $29,400 12,600 8,400 16,800 $67,200 Another company has offered to sell the same component part to the company for $13 per unit. The fixed manufacturing overhead consists mainly of depreciation on the equipment used to manufacture the part and would not be reduced if the component part was purchased from the outside firm. If the component part is purchased from the outside firm, Cullumber Company has the opportunity to use the factory equipment to produce another product which is estimated to have a contribution margin of $18,480. Prepare an incremental analysis report for Cullumber Company which can serve as informational input into this make or buy decision. (Enter negative amounts using either a negative sign preceding the number eg -45 or parentheses eg. (45). Do not leave any field blank. Enter O for the amounts)
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.
Please do not give solution in image format thanku
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 2 images
