PAX Corporation uses Part BLX in the assembly of a major product line . The cost to produce one BLX is presented below : Direct materials P 4,000 Material handling (20% of direct materials) 800 Direct labor 2,000 Overhead 48,000 Total manufacturing costs P 84,800 Material handling which are not included in manufacturing overhead represents the direct variable costs of the receiving department that are applied to direct materials and purchased component on the basis of their costs. The company’s annual overhead budget is one-third variable and two-third fixed. Ten units of BLX are expected to be acquired for one month. ZIM Co. offers to supply BLX at a unit price of P 60,000. Pax, if it chooses to buy BLX can use the idle capacity to produce CZX that could contribute P208,000 a month. If Pax chooses to manufacture BLX to assure quality control, its opportunity costs is a. P208,000 b. P 302,000 c. P 512,000 d. P16,000
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.
PAX Corporation uses Part BLX in the assembly of a major product line . The cost to produce one BLX is presented below :
Direct materials P 4,000
Material handling (20% of direct materials) 800
Direct labor 2,000
Total
Material handling which are not included in manufacturing overhead represents the direct variable costs of the receiving department that are applied to direct materials and purchased component on the basis of their costs. The company’s annual overhead budget is one-third variable and two-third fixed. Ten units of BLX are expected to be acquired for one month. ZIM Co. offers to supply BLX at a unit price of P 60,000. Pax, if it chooses to buy BLX can use the idle capacity to produce CZX that could contribute P208,000 a month. If Pax chooses to manufacture BLX to assure quality control, its opportunity costs is
a. P208,000 b. P 302,000 c. P 512,000 d. P16,000
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