Baker’s Choice Manufacturing manufactures two products: Rolling Pin and Baking Tray. Contribution margin per unit is determined as follows: Rolling Pin Baking Tray Revenue P 130 P 80 Variable Costs (70) (38) Contribution Margin P 60 P 42 Total demand for Rolling Pin is 16,000 units and for Baking Tray is 8,000 units. Machine hour is a scarce resource. 42,000 machine hours are available during the year. Rolling pin requires 6 machine hours per unit while baking tray requires 3 machine hours per unit. Required: How many units does of rolling pin and baking tray should Baker’s Choice produce to optimize profit? (Show your computations.)
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.
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