Monty Company is a leading manufacturer of sunglasses. One of Monty's products protects the eyes from ultraviolet rays. An upscale sporting goods store has contacted Monty about purchasing 29.100 pairs of these sunglasses. Monty's unit manufacturing cost, based on a full capacity of 246,000 units, is as follows: Direct materials Direct labor Manufacturing overhead (75% fixed) Total manufacturing costs $8 6 27 $41 by $ Monty also incurs selling and administrative expenses of $74,600 plus $4 per pair for sales commissions. The company has plenty of excess manufacturing capacity to use in manufacturing the sunglasses. Monty's normal price for these sunglasses is $44 per pair. The sporting goods store has offered to pay $36 per pair. Since the special order was initiated by the sporting goods store, no sales commission will be paid What would be the effect on Monty's income if the special order were accepted? Monty's income will
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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