The Molis Corporation has the capacity to produce 15,000 hats each month. Current regular production and sales are 10,000 hats per month at a selling price of $15 each. Based on this level of activity, the following unit costs are incurred: Per Unit Direct Material $5.00 Direct Labor $3.00 Variable manufacturing overhead $0.75 Fixed manufacturing overhead $1.05 Variable selling expenses $0.75 Fixed SG&A expense $1.00 Unit product cost $12.00 The Molis Corporation has received a special order from a customer who wants to pay a reduced price of $10 per hat. There would be no selling expense in connection with this special order. And, this order would have no effect on the company's other sales.
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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