Mosbius Designs, an architectural firm based in the Upper West Side of New York. Currently, Mosbius Designs is run single-handedly by its owner, Ted Mosby. Ted is considering hiring an assistant, PJ, to help him answer phone calls as business picks up. For the year ended December 31, 2009, Mosbius Designs produced 200 design plans. The following information was provided for 2009: Sales Revenue $250,000 Variable Costs $50,000 Fixed Costs $25,000 If the company hires PJ, Ted believes he can raise the price of each design by $250 due to the improved level of customer service. He will also be able to produce 50 more designs in a year with the extra time. However, the annual fixed costs will increase by the amount of PJ's salary, $55,000. Based on the above information, which of the following statements is incorrect? Question 5 options: The company's contribution margin per unit in 2009 was $1,000. If the company hires PJ, the company must make $96,000 in sales revenue in order to break-even (use all decimals in your calculation) If the company produces 220 designs per year, Ted will be indifferent between hiring or not hiring PJ. If the company hires PJ, the operating income for the year will total $245,000 At a sales level of 221 units, Ted will hire PJ.
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.
Mosbius Designs, an architectural firm based in the Upper West Side of New York. Currently, Mosbius Designs is run single-handedly by its owner, Ted Mosby. Ted is considering hiring an assistant, PJ, to help him answer phone calls as business picks up. For the year ended December 31, 2009, Mosbius Designs produced 200 design plans. The following information was provided for 2009:
|
Sales Revenue |
$250,000 |
|
Variable Costs |
$50,000 |
|
Fixed Costs |
$25,000 |
If the company hires PJ, Ted believes he can raise the price of each design by $250 due to the improved level of customer service. He will also be able to produce 50 more designs in a year with the extra time. However, the annual fixed costs will increase by the amount of PJ's salary, $55,000.
Based on the above information, which of the following statements is incorrect?
Question 5 options:
|
The company's contribution margin per unit in 2009 was $1,000. |
|
|
If the company hires PJ, the company must make $96,000 in sales revenue in order to break-even (use all decimals in your calculation) |
|
|
If the company produces 220 designs per year, Ted will be indifferent between hiring or not hiring PJ. |
|
|
If the company hires PJ, the operating income for the year will total $245,000 |
|
|
At a sales level of 221 units, Ted will hire PJ. |
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