Required: (a) Compute the contribution margin per machine hour for each product. (b) Determine the best sales mix of products. (c) Compute the total contribution margin for the best sales mix.
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.
Subject:- accounting
![Selling price per unit
Variable costs per unit
0
Machine hours per unit
1 Maximum units sold per year
Colt Company produces two skateboard models. Machine time per unit for Hero is
2 hours and for Flip is 1 hour. The machine's capacity is 1,600 hours per year. Colt
can sell up to 500 units of Hero and 900 units of Flip per year. Selling prices and
variable costs follow.
2
3 Machine capacity
10
B
Contribution margin per unit
Hero
5 Required:
6 (a) Compute the contribution margin per machine hour for each product.
7 (b) Determine the best sales mix of products.
8 (c) Compute the total contribution margin for the best sales mix.
9
(b) Determine the best sales mix of products.
2
Required:
3 (a) Compute the contribution margin per machine hour for each product.
4
5
6
7
8
9
10 Contribution margin per machine hour
11
12
13
14
15 Units produced and sold for most profitable sales mix
P
16 Hours required to produce most profitable sales mix
17
18 (c) Compute the total contribution margin for the best sales mix.
19
20
21 Units produced for most profitable sales mix
22 Contribution margin per unit
23 Total contribution margin
Hero
$150
$50
2
500
Hero
Hero
1,600 hours per year
Flip
Flip
Flip
Flip
$95
$55
1
900
Total
Total
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