The garden supply company is introducing various aged trees to their product range in 2021. They have provided the following information relating to its planned activities. I year old 2 years old 3 years old Selling price $15 $24 $40 Variable cost/unit $10 $16 $25 Expected Sales Volume 25,000 15,000 10,000 Total fixed cost = $200,000
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.
Calculate the contribution margin, sales mix and weighted average cost margin for each product and the break-even point in total units and units per product based on the data. Management is now considering increasing the price of 1 year old trees to $17 with an expected drop in volume to 15,000 trees while lowering the price of 3 year old trees to $35 with an expected increase in volume to 20,000 trees. There would be no change to the price and sales volume of 2 year old trees. Implementing this initiative would increase annual fixed costs by $10 000. On the available data, would you recommend the initiative?
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