Stuart Quilting Company makes blankets that it markets through a variety of department stores. It makes the blankets in batches of 6,000 units. Stuart made 36,000 blankets during the prior accounting period. The cost of producing the blankets is summarized here. Materials cost ($33 per unit × 36,000) $ 1,188,000 Labor cost ($29 per unit × 36,000) 1,044,000 Manufacturing supplies ($7 × 36,000) 252,000 Batch-level costs (6 batches at $6,000 per batch) 36,000 Product-level costs 280,000 Facility-level costs 350,000 Total costs $ 3,150,000 Cost per unit = $3,150,000 ÷ 36,000 = $87.5 Required Sunny Motels has offered to buy a batch of 500 blankets for $60 each. Stuart’s normal selling price is $96 per unit. Calculate the relevant cost per unit for the special order. Based on the preceding quantitative data, should Stuart accept the special order? Sunny offered to buy a batch of 6,000 blankets for $75 per unit, calculate the relevant cost per unit for the special order. Should Stuart accept the special order?
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.
Stuart Quilting Company makes blankets that it markets through a variety of department stores. It makes the blankets in batches of 6,000 units. Stuart made 36,000 blankets during the prior accounting period. The cost of producing the blankets is summarized here.
| Materials cost ($33 per unit × 36,000) | $ | 1,188,000 | |
| Labor cost ($29 per unit × 36,000) | 1,044,000 | ||
| Manufacturing supplies ($7 × 36,000) | 252,000 | ||
| Batch-level costs (6 batches at $6,000 per batch) | 36,000 | ||
| Product-level costs | 280,000 | ||
| Facility-level costs | 350,000 | ||
| Total costs | $ | 3,150,000 | |
| Cost per unit = $3,150,000 ÷ 36,000 = $87.5 | |||
Required
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Sunny Motels has offered to buy a batch of 500 blankets for $60 each. Stuart’s normal selling price is $96 per unit. Calculate the relevant cost per unit for the special order. Based on the preceding quantitative data, should Stuart accept the special order?
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Sunny offered to buy a batch of 6,000 blankets for $75 per unit, calculate the relevant cost per unit for the special order. Should Stuart accept the special order?
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