Make or by product.Montrose incorportaion manufactures part 345 for use in one of its main products. normal annual production for part 345 is 100,000 units. the cost for 100 units lot for the part follows: Direct direct labor........100 Factory overhead: material.............$260 variable............ 120 fixed...............160 total cost per 100 units….…..640 kalispel incorporation has offered to sell Montrose all 100,000 units it will need during coming year for $600 per 100 units. if montrose accepts the offer from kalispiel, the facilities used to manufacure part 345 can be used in production of part 789. this change would save montrose $90000 in fixed cost related to the rental of capacity neccesaary to produce part 789. in addition a $50000 cost item included in factory overhead which specifically related to part 345( rental of special equipment not usable in manufacturing of other products) would be eliminated. Required. determine whether or not Montrose incorporataion make part 345 or but it from kalispiel inc for $600 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.
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