PXG is a golf company that manufactures high-end irons. The company currently pays an outside supplier $45 per unit for the stock shaft of its Gen 5 iron line. PXG can sell each of these. irons for $225 each. The company is considering two alternative methods of making the part. The company's predetermined overhead rate is 100% of direct labor costs. PXG's manufacturing costs are listed below. Method 1 Direct Material Cost per unit $20 per unit Direct Labor Cost ?? Overhead cost $15 per unit $10 per unit Incremental overhead $8 per unit $5 per unit • Should PXG make or continue to buy the part from an outside supplier? If PXG will earn more profit making the part, which method is most profitable? • Complete the incremental analysis using an Excel worksheet to show the most profitable solution. Method 2 $25 per unit ??
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.
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