Smith Company produces and sells a single product and prepared the following contribution format income statement based on a sales volume of 1,000 units (the relevant range of production is 500 units to 1,500 units): Sales $ 20,300 Variable expenses 12,100 Contribution margin 8,200 Fixed expenses 6,232 Net operating income $ 1,968 Required: If the variable cost per unit increases by $1.10, spending on advertising increases by $1,600, and unit sales increase by 250 units, what would be the net operating income? (Do not round intermediate calculations.)
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.
| Smith Company produces and sells a single product and prepared the following contribution format income statement based on a sales volume of 1,000 units (the relevant range of production is 500 units to 1,500 units): |
| Sales | $ | 20,300 |
| Variable expenses | 12,100 | |
| Contribution margin | 8,200 | |
| Fixed expenses | 6,232 | |
| Net operating income | $ | 1,968 |
| Required: |
|
If the variable cost per unit increases by $1.10, spending on advertising increases by $1,600, and unit sales increase by 250 units, what would be the net operating income? (Do not round intermediate calculations.) |
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