Supplier A Supplier B Quantity Unit Price Quantity Unit Price 1-2499 $3.00 1-1999 $3.50 2500-3499 2.90 2000-2999 3.15 3500-4999 2.80 3000-3999 2.85 5000 or more 2.70 4000-4999 2.75 5000 or more 2.60
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.
My Kitchen Delights (MKD) is considering two new
suppliers for the jars used in the production process. Th e quality
at both suppliers is equal. Assume that the annual holding cost
is 30 percent of the unit price. Monthly demand averages 20,000
jars. Ordering cost with these two suppliers is $30 per order. Th e
price lists for the suppliers are as follows:
(a) Determine the optimal order quantity when using
Supplier A.
(b) Determine the optimal order quantity when using
Supplier B.
(c) Given MKD’s lack of space, which supplier do you
recommend be used? Justify your answer.
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