Answer last three requirement, if you can answer all it will be very helpful otherwise answer last three Selected data for Babar Ltd of past year of operations are presented below Product X 25000 Production [ in units ] Sales in units 1 Selling price DLHours Manufacturing cost Raw Materials [S] Salaries of direct labour[S] Actual machine hours worked Hourly rate for DLH Non manufacturing cost Variable selling Fixed selling cost 18000 $4.00 800 17000 24000 8000 $30.00 18000 15000 Estimated fixed cost = $28000 Budgeted Machine hours = 8400 Company uses absorption cost based on machine hours. For calculating product cost using variable costing, assume 40 % of the overhead applied to be variable overhead [VOHJand the rest to be fixed overhead [FOH] %3D REQUIRED 1. Calculate product cost of product X using variable cost. 2. Calculate product cost of product X using absorption cost. 3. Calculate variable cost of goods for the year 4. Find the variable-costing net income 5. Calculate cost of goods for the year using absorption method 6. Find the net income using absorption method
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.
Step by step
Solved in 3 steps