Marionette Company manufactures dolls that are sold to various distributors. The company produces at full capacity for six months each year to meet peak demand; the manufacturing facility operates at 70% of capacity for the other six months of the year. The company has provided the following data for the year: No. of units produced and sold 600,000 units Sales price $30 per unit Variable manufacturing costs $10 per unit Fixed manufacturing costs $1,000,000 per year Variable selling and administrative costs $3 per unit Fixed selling and administrative costs $500,000 per year Marionette receives an offer to produce 7000 dolls for a special event. This is a one-time opportunity during a period when the company has excess capacity. What is the minimum sales price the company should accept for the order?
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.
Marionette Company manufactures dolls that are sold to various distributors. The company produces at full capacity for six months each year to meet peak demand; the manufacturing facility operates at 70% of capacity for the other six months of the year. The company has provided the following data for the year:
|
No. of units produced and sold |
600,000 |
units |
|
Sales price |
$30 |
per unit |
|
Variable |
$10 |
per unit |
|
Fixed manufacturing costs |
$1,000,000 |
per year |
|
Variable selling and administrative costs |
$3 |
per unit |
|
Fixed selling and administrative costs |
$500,000 |
per year |
Marionette receives an offer to produce 7000 dolls for a special event. This is a one-time opportunity during a period when the company has excess capacity. What is the minimum sales price the company should accept for the order?
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