Tanner Company’s most recent contribution format income statement is presented below: Sales $75,000 Less Variable Expenses 45,000 Contribution Margin 30,000 Less Fixed Expenses 36,000 Net Income ($6,000) The company sells its only product for $15 per unit. There was no beginning or ending inventories. The sales manager is convinced that a $6,000 increase in the advertising budget would increase total sales by $25,000. Would you advise the increased advertising outlay?
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.
Tanner Company’s most recent contribution format income statement is presented below:
Sales $75,000
Less Variable Expenses 45,000
Contribution Margin 30,000
Less Fixed Expenses 36,000
Net Income ($6,000)
The company sells its only product for $15 per unit. There was no beginning or ending inventories. The sales manager is convinced that a $6,000 increase in the advertising budget would increase total sales by $25,000. Would you advise the increased advertising outlay?
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