Oki Products, Ltd., has observed the following processing costs at various levels of activity over the last15 months:Units ProcessingMonth Produced Cost1 ......................................... 4,500 $38,0002 ......................................... 11,000 $52,0003 ......................................... 12,000 $56,0004 ......................................... 5,500 $40,0005 ......................................... 9,000 $47,0006 ......................................... 10,500 $52,0007 ......................................... 7,500 $44,0008 ......................................... 5,000 $41,0009 ......................................... 11,500 $52,00010 ......................................... 6,000 $43,00011 ......................................... 8,500 $48,00012 ......................................... 10,000 $50,00013 ......................................... 6,500 $44,00014 ......................................... 9,500 $48,00015 ......................................... 8,000 $46,000 Required:1. Prepare a scattergraph using the above data. Plot cost on the vertical axis and activity on the horizontalaxis. Fit a line to your plotted points using a ruler.2. Using the quick-and-dirty method, what is the approximate monthly fixed cost? The approximatevariable cost per unit processed? Show your computations.
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.
Oki Products, Ltd., has observed the following
15 months:
Units Processing
Month Produced Cost
1 ......................................... 4,500 $38,000
2 ......................................... 11,000 $52,000
3 ......................................... 12,000 $56,000
4 ......................................... 5,500 $40,000
5 ......................................... 9,000 $47,000
6 ......................................... 10,500 $52,000
7 ......................................... 7,500 $44,000
8 ......................................... 5,000 $41,000
9 ......................................... 11,500 $52,000
10 ......................................... 6,000 $43,000
11 ......................................... 8,500 $48,000
12 ......................................... 10,000 $50,000
13 ......................................... 6,500 $44,000
14 ......................................... 9,500 $48,000
15 ......................................... 8,000 $46,000
Required:
1. Prepare a scattergraph using the above data. Plot cost on the vertical axis and activity on the horizontal
axis. Fit a line to your plotted points using a ruler.
2. Using the quick-and-dirty method, what is the approximate monthly fixed cost? The approximate
variable cost per unit processed? Show your computations.
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