Sandy Bank, Inc., makes one model of wooden canoe. and, the information for it follows: Number of canoes produced and sold 400 600 750 Total costs Variable costs $ 50,000 $ 75,000 $ 93,750 Fixed costs $ 90,000 $ 90,000 $ 90,000 Total costs $ 140,000 $ 165,000 $ 183,750 Cost per unit Variable cost per unit $ 125.00 $ 125.00 $ 125.00 Fixed cost per unit 225.00 150.00 120.00 Total cost per unit $ 350.00 $ 275.00 $ 245.00 Sandy Bank sells its canoes for $375 each. Required: 1. Suppose that Sandy Bank raises its selling price to $500 per canoe. Calculate its new break-even point in units and in sales dollars. 2. If Sandy Bank sells 670 canoes, compute its margin of safety in dollars and as a percentage of sales. (Use the new sales price of $500.) 3. Calculate the number of canoes that Sandy Bank must sell at $500 each to generate $100,000 profit.
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.
Sandy Bank, Inc., makes one model of wooden canoe. and, the information for it follows:
| Number of canoes produced and sold | 400 | 600 | 750 | ||||
| Total costs | |||||||
| Variable costs | $ | 50,000 | $ | 75,000 | $ | 93,750 | |
| Fixed costs | $ | 90,000 | $ | 90,000 | $ | 90,000 | |
| Total costs | $ | 140,000 | $ | 165,000 | $ | 183,750 | |
| Cost per unit | |||||||
| Variable cost per unit | $ | 125.00 | $ | 125.00 | $ | 125.00 | |
| Fixed cost per unit | 225.00 | 150.00 | 120.00 | ||||
| Total cost per unit | $ | 350.00 | $ | 275.00 | $ | 245.00 | |
Sandy Bank sells its canoes for $375 each.
Required:
1. Suppose that Sandy Bank raises its selling price to $500 per canoe. Calculate its new break-even point in units and in sales dollars.
2. If Sandy Bank sells 670 canoes, compute its margin of safety in dollars and as a percentage of sales. (Use the new sales price of $500.)
3. Calculate the number of canoes that Sandy Bank must sell at $500 each to generate $100,000 profit.
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