Sandhill Doors, Inc. is in the process of setting a target selling price on its newly designed patio door. Cost data relating to the door at budgeted volume of 5,000 units is as follows: Direct materials Direct labor Variable manufacturing overhead Fixed manufacturing overhead Variable selling and administrative expenses Fixed selling and administrative expenses Per Unit $120 196 Target selling price of the patio door 104 40 Total Markup percentage needed to provide the desired ROI $900,000 Sandhill uses cost-plus pricing that provides it with a 25% ROI on its patio door line. A total of $4,800,000 in assets is committed to production of the new door. 450,000 Compute each of the following under the absorption-cost approach: (Round answers to 0 decimal places, e.g. 5,275.)
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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