The Martinez Company manufactures 4,600 units of a part that could be purchased from an outside supplier for $14 each. Martinez's costs to manufacture each part are as follows: Direct materials. Direct labor Variable manufacturing overhead Fixed manufacturing overhead Total (a-b) (a) Calculate relevant cost to make. Your answer is correct. Relevent cost to make $ All fixed overhead is unavoidable and is allocated based on direct labor. The facilities that are used to manufacture the part have no alternative uses. Yes (c-d) e Textbook and Media $3 2 5 Net cost to buy $ 9 (b) Should Martinez continue to manufacture the part? $19 10 per unit (c) If Martinez could lease the manufacturing facilities to another company for $24,600 per year, what would be the net total cost to outsource production of the part? Attempts: 1 of 3 used (d) Should Martinez outsource production of the part given the opportunity to lease the facilities?
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.
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