Paradise Marine Sails manufactures sails for sailboats. The company’s capacity is 29,000 sails per month. They are currently producing 25,000 sails a month. Current production cost can be found in the chart below: Sales Price
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.
Paradise Marine Sails manufactures sails for sailboats. The company’s capacity is 29,000 sails per month. They are currently producing 25,000 sails a month.
Current production cost can be found in the chart below:
|
Sales Price |
$200 |
|
Variable Cost |
|
|
|
$100 |
|
Administrative Cost |
$50 |
|
Total Fixed Cost |
|
|
Manufacturing |
$500,000 |
|
Administrative |
$480,000 |
- Should you accept a special order at a price of $170 for 3000 sails? Fixed cost will increase by $9,000 to produce these sails. Give a numerical justification
- Would your answer be different if the company was currently producing 28,000 sails?
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