Sunland Water Co. is a leading producer of greenhouse irrigation systems. Currently, the company manufactures the timer unit used in each of its systems. Based on an annual production of 43,500 timers, the company has calculated the following unit costs. Direct fixed costs include supervisory and clerical salaries and equipment depreciation. Direct materials Direct labor Variable manufacturing overhead Direct fixed manufacturing overhead Allocated fixed manufacturing overhead Total unit cost $11 6 3 8 (30% salaries, 70% depreciation) 9 $37 Clifton Clocks has offered to provide the timer units to Sunland at a price of $34 per unit. If Sunland accepts the offer, the current timer unit supervisory and clerical staff will be laid off.
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.
![Sunland Water Co. is a leading producer of greenhouse irrigation systems. Currently, the company manufactures the timer unit used
in each of its systems. Based on an annual production of 43,500 timers, the company has calculated the following unit costs. Direct
fixed costs include supervisory and clerical salaries and equipment depreciation.
Direct materials
Direct labor
Variable manufacturing overhead
Direct fixed manufacturing overhead
Allocated fixed manufacturing overhead
Total unit cost
$11
6
3
8 (30% salaries, 70% depreciation)
9
$37
Clifton Clocks has offered to provide the timer units to Sunland at a price of $34 per unit. If Sunland accepts the offer, the current
timer unit supervisory and clerical staff will be laid off.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fdfd56cfb-7bfc-4b10-8703-50c36abb0228%2F368d158d-d262-4150-b7f9-8f9b114905c3%2Fzx9yh45_processed.jpeg&w=3840&q=75)
![Your answer is incorrect.
Assume that if Sunland Water accepts Clifton's offer, the company can use the freed-up manufacturing facilities to manufacture a
new line of growing lights. The company estimates it can sell 86,490 of the new lights each year at a price of $11. Variable costs of
the lights are expected to be $8 per unit. The timer unit supervisory and clerical staff would be transferred to this new product
line Calculate the total relevant cost to make the timer units and the net cost if they accept Clifton's offer.
Total relevant cost to make
Net relevant cost if they accept Clifton's offer
$
$](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fdfd56cfb-7bfc-4b10-8703-50c36abb0228%2F368d158d-d262-4150-b7f9-8f9b114905c3%2Fz5n2m3a_processed.jpeg&w=3840&q=75)
![](/static/compass_v2/shared-icons/check-mark.png)
Step by step
Solved in 3 steps
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
![FINANCIAL ACCOUNTING](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781259964947/9781259964947_smallCoverImage.jpg)
![Accounting](https://www.bartleby.com/isbn_cover_images/9781337272094/9781337272094_smallCoverImage.gif)
![Accounting Information Systems](https://www.bartleby.com/isbn_cover_images/9781337619202/9781337619202_smallCoverImage.gif)
![FINANCIAL ACCOUNTING](https://compass-isbn-assets.s3.amazonaws.com/isbn_cover_images/9781259964947/9781259964947_smallCoverImage.jpg)
![Accounting](https://www.bartleby.com/isbn_cover_images/9781337272094/9781337272094_smallCoverImage.gif)
![Accounting Information Systems](https://www.bartleby.com/isbn_cover_images/9781337619202/9781337619202_smallCoverImage.gif)
![Horngren's Cost Accounting: A Managerial Emphasis…](https://www.bartleby.com/isbn_cover_images/9780134475585/9780134475585_smallCoverImage.gif)
![Intermediate Accounting](https://www.bartleby.com/isbn_cover_images/9781259722660/9781259722660_smallCoverImage.gif)
![Financial and Managerial Accounting](https://www.bartleby.com/isbn_cover_images/9781259726705/9781259726705_smallCoverImage.gif)