Watts Corporation produces various products used in the construction industry. The Plumbing Division produces and sells 100,000 copper fittings each month. Relevant information for last month follows: Total sales (all external) $250,000 Expenses (all on a unit base): Variable manufacturing $0.50 Fixed manufacturing .25 Variable selling .30 Fixed selling .40 Variable G&A .15 Fixed G&A .50 Total $2.10 Top-level managers are trying to determine how a transfer price can be set on a transfer of 10,000 of the copper fittings from the Plumbing Division to the Bathroom Products Division. A transfer price based on full production cost would be set at ___________ per unit.
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.
Watts Corporation produces various products used in the construction industry. The Plumbing Division produces and sells 100,000 copper fittings each month. Relevant information for last month follows:
|
Total sales (all external) |
$250,000 |
|
Expenses (all on a unit base): |
|
|
Variable manufacturing |
$0.50 |
|
Fixed manufacturing |
.25 |
|
Variable selling |
.30 |
|
Fixed selling |
.40 |
|
Variable G&A |
.15 |
|
Fixed G&A |
.50 |
|
Total |
$2.10 |
Top-level managers are trying to determine how a transfer price can be set on a transfer of 10,000 of the copper fittings from the Plumbing Division to the Bathroom Products Division. A transfer price based on full production cost would be set at ___________ per unit.
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