iny Tots Daycare Centre provides daycare for children Mondays through Fridays. The business had $140,000 of net income in 2015, when 50 students were enrolled and data for variable costs per child and total fixed costs were as follows: Cost Schedule: Variable Costs: Lunch & snacks $1,000 Education Supplies 750 Other supplies (toiletries etc.) 250 $2,000 Fixed Costs: Rent $20,000 Utilities 3,000 Insurance 3,000 Salaries 30,000 Miscellaneous 4,000 $60,000 Required: a) Compute the
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.
iny Tots Daycare Centre provides daycare for children Mondays through Fridays. The
business had $140,000 of net income in 2015, when 50 students were enrolled and data for
variable costs per child and total fixed costs were as follows:
Cost Schedule:
Variable Costs: Lunch & snacks $1,000
Education Supplies 750
Other supplies (toiletries etc.) 250
$2,000
Fixed Costs: Rent $20,000
Utilities 3,000
Insurance 3,000
Salaries 30,000
Miscellaneous 4,000
$60,000
Required:
a) Compute the charge per child, using the equation method.
b) What is the contribution per child? What is the contribution margin ratio?
c) Calculate Tiny Tot’s break-even point in number of children and in sales dollars.
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