Success Sdn Bhd sells lorries. During the current year, 100 lorries were sold resulting in RM820,000 of sales revenue, RM250,000 of variable costs, and RM342,000 of fixed costs. Required: Calculate a. the number of lorries that must be sold to achieve RM300,000 of operating income. b. the contribution margin at the breakeven point of 2,000 units, variable costs total RM4,000 and fixed costs total RM6,000. c. Explain the term breakeven point.
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.
Success Sdn Bhd sells lorries. During the current year, 100 lorries were sold resulting in
RM820,000 of sales revenue, RM250,000 of variable costs, and RM342,000 of fixed
costs.
Required: Calculate
a. the number of lorries that must be sold to achieve RM300,000 of operating
income.
b. the contribution margin at the breakeven point of 2,000 units, variable costs
total RM4,000 and fixed costs total RM6,000.
c. Explain the term breakeven point.
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