hafford Inc. currently manufactures 2000 subcomponents in one of its factories. The unit costs to produce the subcomponents are Direct materials 64 Direct labor 100 Variable manufacturing overhead 77 Fixed manufacturing overhead 92 Total units cost $333 Due to a labor strike, chafford is considering purchasing the subcomponets from an outside supplier for 250 per unit. The union is demanding 20% increase in pay for direct labor. Fixed overhead is not avoidable. How much could chafford increase their pay beofre it would be more advantageous to purchase the subcomponents from the outside supplier? 5% 9% 50% or 45% ?
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.
Chafford Inc. currently manufactures 2000 subcomponents in one of its factories. The unit costs to produce the subcomponents are
Direct materials 64
Direct labor 100
Variable manufacturing
Fixed manufacturing overhead 92
Total units cost $333
Due to a labor strike, chafford is considering purchasing the subcomponets from an outside supplier for 250 per unit. The union is demanding 20% increase in pay for direct labor. Fixed overhead is not avoidable.
How much could chafford increase their pay beofre it would be more advantageous to purchase the subcomponents from the outside supplier?
5% 9% 50% or 45% ?
Step by step
Solved in 3 steps with 1 images
