What is the company’s break-even point in both units and sales dollars? Without restoring the computation, what is the total contribution margin at the breakeven point? How many units to be sold to earn the profit of S180, 000? Refer to data compute the company’s margin of safety and margin of safety in % of total sales? Compute the CM Ratio? If monthly sales increase by $ 80,000 what is increase in contribution margin, used contribution margin ratio.
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.
Pringle Company distribute a single product. The company sales and expenses for the recent month are below;
| Total Cost | Per Unit | |
| Total Sales Revenue | $ 1,200,000 | $ 40 |
| Variable Expenses | 840,000 | 28 |
| Contribution Margin | 360,000 | 12 |
| Fixed Expenses | 300,000 | |
| Net Operating Income | 60,000 |
|
Required:
- What is the company’s break-even point in both units and sales dollars?
- Without restoring the computation, what is the total contribution margin at the breakeven point?
- How many units to be sold to earn the profit of S180, 000?
- Refer to data compute the company’s margin of safety and margin of safety in % of total sales?
- Compute the CM Ratio? If monthly sales increase by $ 80,000 what is increase in contribution margin, used contribution margin ratio.
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