Speedy Pete's is a small start-up company that delivers high-end coffee drinks to large metropolitan office buildings via a cutting-edge motorized coffee cart to compete with other premium coffe shops. Data for the past 8 months were collected as follows: Month Delivery Cost Number of Deliveries May June July $63,450 1,800 67,120 2,010 66,990 2,175 68,020 August September October 2,200 73,400 2,550 72,850 2,630 November 75,450 2,800 December 73,300 2,725
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.
Using High-Low to Calculate Fixed Cost, Calculate the
Variable Rate, and Construct a Cost Function
Refer to the information for Speedy Pete’s above. Speedy Pete’s controller wants to calculate the
fixed and variable costs associated with its cutting-edge delivery service.
Required:
Using the high-low method, calculate the fixed cost of deliveries, calculate the variable rate per
delivery, and construct the cost formula for total delivery cost
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