Grounded Coffee Products manufactures coffee tables. Grounded Coffee Products has a policy of adding a 20% markup to full costs and currently has excess capacity. The following information pertains to the company's normal operations per month: Output units 30,000 tables Machine-hours 6000 hours Direct manufacturing labor-hours 10,000 hours Direct materials per unit $50 Direct manufacturing labor per hour $12.00 Variable manufacturing overhead costs $322,500 Fixed manufacturing overhead costs $1,200,000 Product and process design costs $600,000 Marketing and distribution costs $1,290,000 For long-run pricing of the coffee tables, what price will most likely be used by Grounded Coffee
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.
Grounded Coffee Products manufactures coffee tables. Grounded Coffee Products has a policy of
adding a 20% markup to full costs and currently has excess capacity. The following information
pertains to the company's normal operations per month:
Output units 30,000 tables
Machine-hours 6000 hours
Direct manufacturing labor-hours 10,000 hours
Direct materials per unit $50
Direct manufacturing labor per hour $12.00
Variable
Fixed manufacturing overhead costs $1,200,000
Product and
Marketing and distribution costs $1,290,000
For long-run pricing of the coffee tables, what price will most likely be used by Grounded Coffee?
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