Weldon’s Concrete (WC) wishes to present its operating results for the year ended December 31, 2016, in the form of a contribution margin income statement. Weldon’s Concrete produces a single product and has a relevant range between 20,000 and 80,000 units. Total production costs range from $321,875 to $966,875 at the low and high ends of the relevant range, respectively. Sales volume in 2016 was 32,000 units, and net income was $45,125. Weldon’s Concrete does not maintain any beginning or ending Work-In-Progress or Finished Goods inventories. Questions: 1. Prepare a contribution margin income statement for the year ended December 31, 2016. Include columns for total dollars, per-unit dollars, and percentages of sales. 2. Draw a rough Cost-Volume-Profit (CVP) graph for this situation. Draw (include) and label all relevant axes, points and lines, and the break-even point.
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.
Weldon’s Concrete (WC) wishes to present its operating results for the year ended December 31, 2016, in the form of a contribution margin income statement. Weldon’s Concrete produces a single product and has a relevant range between 20,000 and 80,000 units. Total production costs range from $321,875 to $966,875 at the low and high ends of the relevant range, respectively. Sales volume in 2016 was 32,000 units, and net income was $45,125. Weldon’s Concrete does not maintain any beginning or ending Work-In-Progress or Finished Goods inventories.
Questions:
1. Prepare a contribution margin income statement for the year ended December 31, 2016. Include columns for total dollars, per-unit dollars, and percentages of sales.
2. Draw a rough Cost-Volume-Profit (CVP) graph for this situation. Draw (include) and label all relevant axes, points and lines, and the break-even point.
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