Rippey Corporation manufactures a single product with the following unit costs for 5,000 units: Direct materials $ 60 Direct labor 30 Factory overhead (40% variable) 90 Selling expenses (60% variable) 30 Administrative expenses (20% variable) 15 Total per unit $225 Recently, a company approached Rippey Corporation about buying 1,000 units for $225. Currently, the models are sold to dealers for $412.50. Rippey's capacity is sufficient to produce the extra 1,000 units. No additional selling expenses would be incurred on the special order. How much is the increase/(decrease) in income if the special order would be accecpted?
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.
Rippey Corporation manufactures a single product with the following unit costs for 5,000 units:
Direct materials $ 60
Direct labor 30
Factory
Selling expenses (60% variable) 30
Administrative expenses (20% variable) 15
Total per unit $225
Recently, a company approached Rippey Corporation about buying 1,000 units for $225. Currently, the models are sold to dealers for $412.50. Rippey's capacity is sufficient to produce the extra 1,000 units. No additional selling expenses would be incurred on the special order.
How much is the increase/(decrease) in income if the special order would be accecpted?
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