Grand Canyon Manufacturing Inc. produces and sells a product with a price of $100 per unit. The following cost data have been prepared for its estimated upper and lower limits of activity: Lower Limit Upper Limit Production (units) 4,000 6,000 Production costs: $ 60,000 $ 90,000 Direct materials Direct labor... 80,000 120,000 Overhead: Indirect materials 25,000 37,500 Indirect labor..... 40,000 50,000 20,000 ..... Selling and administrative expenses: Depreciation . 20,000 Sales salaries .. 50,000 65,000 Office salaries. 30,000 30,000 Advertising.. 45,000 45,000 Other ... 15,000 20,000 Total... $365,000 $477,500 ..... REQUIRED: 2. Calculate the break-even point in units and dollars. (Hint: First use the high-low method illustrated in Chapter 4 to separate costs into their fixed and variable components.)
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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