Matchless Technologies Company has been purchasing carrying cases for its portable tablets at a delivered cost of $58 per unit. The company, which is currently operating below full capacity, charges factory overhead to production at the rate of 42% of direct labor cost. The fully absorbed unit costs to produce comparable carrying cases are expected to be as follows: Direct materials $24.00 Direct labor 22.00 Factory overhead (42% of direct labor) 9.24 Total cost per unit $55.24 If Matchless Technologies Company manufactures the carrying cases, fixed factory overhead costs will not increase and variable factory overhead costs associated with the cases are expected to be 13% of the direct labor costs. a. Prepare a differential analysis report for the make-or-buy decision. Enter your final answer as a positive amount if it represents a net cost savings; enter negative amount if it represents an increase in cost. MATCHLESS TECHNOLOGIES COMPANY Manufacture Carrying Case Differential Analysis Report Purchase price of carrying čase Differential cost to manufacture carrying case: Next Check My Work Sign out
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.
Formula:
Total cost per unit = Direct materials + Direct labor + Factory overhead.
Sum of direct materials, direct labor and factory overheads derives the Total cost per unit.
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