Exercise 4-2 Marta Mfg. Co. manufactures cellular phones. For the coming vear, the company has budgeted the following costs for the production and sale of 3,000 cellular units. Percentage Budgeted of costs Budgeted considered costs per Unit P210 variable costs P630,000 Direct materials 100% Direct labor 300,000 100 100% Factory overhead Selling & administrative 720,000 240 20% 25% 600,000 P2,250,000 200 expenses Totals P750 REQUIRED: 1. Compute the sales price per unit that would result in a budgeting operating income of P900,000, assuming that the company produces and sells 3,000 units. (Hint: First compute the budgeted sales revenue needed to produce this operating income.) 2. Assuming that the company decides to sell the cellular units at a unit price o P1,250 per unit, compute the following: a. Total fixed costs budgeted for the year. b. Variable costs per unit. c. The unit contribution margin. d. The number of cellular units that must be produced and sold annually tc break even at a sales price of P1,000 per unit.
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.
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