Fatima Electronics LLC also plans to introduce a new model of mobile phone in the market. The expected life cycle of the product is three years. The company has been adopting the traditional method of costing. Imagine you are the management accountant of the company and you suggest the management to adopt Life Cycle Costing for the mobile phone instead of traditional method of costing. You have the following information at your disposal: Mobile phone year 1 year 2 year 3 Research and development 1500 Production cost per unit 200 190 188 Customer service cost per unit 32 31 29 Advertising and sales promotion cost 25 19 14 Retirement and disposal cost 300 Units produced and sold 350 280 400 The Life Cycle Cost per unit will be:
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.
Fatima Electronics LLC also plans to introduce a new model of mobile phone in the market. The expected life cycle of the product is three years. The company has been adopting the traditional method of costing. Imagine you are the
Mobile phone
year 1
year 2
year 3
Research and development
1500
Production cost per unit
200
190
188
Customer service cost per unit
32
31
29
Advertising and sales promotion cost
25
19
14
Retirement and disposal cost
300
Units produced and sold
350
280
400
The Life Cycle Cost per unit will be:
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