Profitability Analysis Razerian makes production for audio. A total of 500 hours in January 2021 is available per month in this operation beause they face COVID 19, so they must decrease their productive hours. Data concerning the company’s four products appear below: Headphone Earbuds Speaker Bluetooth Home theather Monthly demand in units 80 120 100 140 Hours required in operation per unit 0.6 1.8 0.4 2.5 Unit contribution margin $12 $36 $8 $50 Variable Expenses $8 $20 $5 $30 No fixed costs could be avoided by modifying how many units are produced of any product or even by dropping any one of the products. Question: Within this month, calculate the contribution margin and what should Razerian do if they want to get optimum margin?
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.
Profitability Analysis
Razerian makes production for audio. A total of 500 hours in January 2021 is available per month in this operation beause they face COVID 19, so they must decrease their productive hours. Data concerning the company’s four products appear below:
| Headphone | Earbuds | Speaker Bluetooth | Home theather | |
| Monthly demand in units | 80 | 120 | 100 | 140 |
| Hours required in operation per unit | 0.6 | 1.8 | 0.4 | 2.5 |
| Unit contribution margin | $12 | $36 | $8 | $50 |
| Variable Expenses | $8 | $20 | $5 | $30 |
No fixed costs could be avoided by modifying how many units are produced of any product or even by dropping any one of the products.
Question: Within this month, calculate the contribution margin and what should Razerian do if they want to get optimum margin?
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