Windsor Corporation incurred the following costs during 2022. Direct materials used in product $120,000 Advertising expense $45,000 Depreciation on factory 60,000 Property taxes on factory 14,200 Property taxes on store 7,500 Delivery expense 20,800 Labor costs of assembly-line workers 110,000 Sales
Cost-Volume-Profit Analysis
Cost Volume Profit (CVP) analysis is a cost accounting method that analyses the effect of fluctuating cost and volume on the operating profit. Also known as break-even analysis, CVP determines the break-even point for varying volumes of sales and cost structures. This information helps the managers make economic decisions on a short-term basis. CVP analysis is based on many assumptions. Sales price, variable costs, and fixed costs per unit are assumed to be constant. The analysis also assumes that all units produced are sold and costs get impacted due to changes in activities. All costs incurred by the company like administrative, manufacturing, and selling costs are identified as either fixed or variable.
Marginal Costing
Marginal cost is defined as the change in the total cost which takes place when one additional unit of a product is manufactured. The marginal cost is influenced only by the variations which generally occur in the variable costs because the fixed costs remain the same irrespective of the output produced. The concept of marginal cost is used for product pricing when the customers want the lowest possible price for a certain number of orders. There is no accounting entry for marginal cost and it is only used by the management for taking effective decisions.
Windsor Corporation incurred the following costs during 2022.
|
Direct materials used in product
|
$120,000 |
Advertising expense
|
$45,000 | |||
|---|---|---|---|---|---|---|
|
|
60,000 |
Property taxes on factory
|
14,200 | |||
|
Property taxes on store
|
7,500 |
Delivery expense
|
20,800 | |||
|
Labor costs of assembly-line workers
|
110,000 |
Sales commissions
|
35,000 | |||
|
Factory supplies used
|
23,400 |
Salaries paid to sales clerks
|
50,000 |
Work in process inventory was $12,100 at January 1 and $15,400 at December 31. Finished goods inventory was $60,000 at January 1 and $45,500 at December 31.
Compute cost of goods manufactured.
| Cost of goods manufactured | $enter the cost of goods manufactured in dollars |
| Cost of goods sold | $enter the cost of goods sold in dollars |
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
