Madrid Corporation has compiled the following information from the accounting system for the one product it sells. Sales price $ 900 per unit Fixed costs (for the month) Marketing and administrative $ 108,000 Manufacturing overhead $ 162,000 Variable costs (per unit) Marketing and administrative $ 18 Direct materials $ 270 Manufacturing overhead $ 60 Direct labor $ 165 Units produced and sold (for the month) 1,800 Exercise 2-50 (Static) Components of Full Costs (LO 2-6) Required: a. Determine the variable manufacturing cost per unit. b. Determine the variable cost per unit. c. Determine the full absorption cost per unit. d. Determine the full cost per unit.
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.
Madrid Corporation has compiled the following information from the accounting system for the one product it sells.
| Sales price | $ | 900 | per unit |
| Fixed costs (for the month) | |||
| Marketing and administrative | $ | 108,000 | |
| Manufacturing |
$ | 162,000 | |
| Variable costs (per unit) | |||
| Marketing and administrative | $ | 18 | |
| Direct materials | $ | 270 | |
| Manufacturing overhead | $ | 60 | |
| Direct labor | $ | 165 | |
| Units produced and sold (for the month) | 1,800 | ||
Exercise 2-50 (Static) Components of Full Costs (LO 2-6)
Required:
a. Determine the variable
b. Determine the variable cost per unit.
c. Determine the full absorption cost per unit.
d. Determine the full cost per unit.
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