Morning Dove Company manufactures one model of birdbath, which is very popular. Morning Dove sells all units it produces each month. The relevant range is 0–1,800 units, and monthly production costs for the production of 1,400 units follow. Morning Dove’s utilities and maintenance costs are mixed with the fixed components shown in parentheses. Production Costs Total Cost Direct materials $1900 Direct labor $6700 Utilities ($150 fixed) $570 Supervisor’s salary $2500 Maintenance ($260 fixed) $520 Depreciation $750 Required: 1. Identify each cost as variable, fixed, or mixed, and express each cost as a rate per month or per unit (or combination thereof). 2. Determine the total fixed cost per month and the variable cost per unit for Morning Dove. 3. State Morning Dove’s linear cost equation for a production level of 0–1,800 units. Enter answer as an equation in the form of y = a + bx. 4. Calculate Morning Dove’s expected total cost if production increased to 1,600 units per month. Enter answer as an equation in the form of y = a + bx.
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.
Morning Dove Company manufactures one model of birdbath, which is very popular. Morning Dove sells all units it produces each month. The relevant range is 0–1,800 units, and monthly production costs for the production of 1,400 units follow. Morning Dove’s utilities and maintenance costs are mixed with the fixed components shown in parentheses.
| Production Costs | Total Cost | |
| Direct materials | $1900 | |
| Direct labor | $6700 | |
| Utilities ($150 fixed) | $570 | |
| Supervisor’s salary | $2500 | |
| Maintenance ($260 fixed) | $520 | |
| $750 | ||
Required:
1. Identify each cost as variable, fixed, or mixed, and express each cost as a rate per month or per unit (or combination thereof).
2. Determine the total fixed cost per month and the variable cost per unit for Morning Dove.
3. State Morning Dove’s linear cost equation for a production level of 0–1,800 units. Enter answer as an equation in the form of y = a + bx.
4. Calculate Morning Dove’s expected total cost if production increased to 1,600 units per month. Enter answer as an equation in the form of y = a + bx.
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