Problem 18 (Impact on overall profits). MAUREEN Co. has 2 Departments, ANGELICA and JONRIEL. ANGELICA Department sells 80 000 units of X to the outside market. Selling price for this product is P20.00, Variable cost per unit of P9.00 and a fixed cost per unit of P5.00. ANGELICA has a capacity to produce 100 000 units per period. JONRIEL Department currently purchases 10 000 units of X from JONRIEL Department for P20.00, the price charged to outsiders. JONRIEL has been approached by an outside supplier who is willing to charge X for P11.00. What is the effect on MAUREEN Co.’s overall profit if ANGELICA refuses to lower the price and JONRIEL decides to buy outside? What is the effect on MAUREEN Co.’s overall profit if ANGELICA lowered the price to P11.00 yet JONRIEL decides to buy outside? What is the effect on MAUREEN Co.’s overall profit if ANGELICA refuses to lower the price and JONRIEL still decides to buy inside?
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.
Problem 18 (Impact on overall profits).
MAUREEN Co. has 2 Departments, ANGELICA and JONRIEL. ANGELICA Department sells 80 000 units of X to the outside market. Selling price for this product is P20.00, Variable cost per unit of P9.00 and a fixed cost per unit of P5.00. ANGELICA has a capacity to produce 100 000 units per period. JONRIEL Department currently purchases 10 000 units of X from JONRIEL Department for P20.00, the price charged to outsiders. JONRIEL has been approached by an outside supplier who is willing to charge X for P11.00.
What is the effect on MAUREEN Co.’s overall profit if ANGELICA refuses to lower the price and JONRIEL decides to buy outside?
What is the effect on MAUREEN Co.’s overall profit if ANGELICA lowered the price to P11.00 yet JONRIEL decides to buy outside?
What is the effect on MAUREEN Co.’s overall profit if ANGELICA refuses to lower the price and JONRIEL still decides to buy inside?
What is the effect on MAUREEN Co.’s overall profit if ANGELICA lowered the price to P11.00 and JONRIEL decides to buy inside?
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