• Option 1. Increase the plant’s output to 72,000 units a week by adding overtime, by adding Saturday operations, or both. No increase in fixed costs is entailed, but the variable cost is $72 per unit for any output in excess of 48,000 units per week, up to a 72,000-unit capacity. • Option 2. Operate a second shift. The maximum capacity of the second shift is 42,000 units per week. The variable cost of the second shift is $63 per unit, and the operation of a second shift entails additional fixed costs of $27,000 per week. FIND the differential cost for 2 options? Also Find the Break-even volume.
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.
Kingston Corporation has one of its manufacturing plants operating on a singleshift five-day week. The plant is operating at its full capacity (48,000 units of output per week) without the use of overtime or extra shifts. Fixed costs for single-shift operation amount to $180,000 per week. The
• Option 1. Increase the plant’s output to 72,000 units a week by adding overtime, by adding Saturday operations, or both. No increase in fixed costs is entailed, but the variable cost is $72 per unit for any output in excess of 48,000 units per week, up to a 72,000-unit capacity.
• Option 2. Operate a second shift. The maximum capacity of the second shift is 42,000 units per week. The variable cost of the second shift is $63 per unit, and the operation of a second shift entails additional fixed costs of $27,000 per week. FIND the differential cost for 2 options? Also Find the Break-even volume.
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