Bettlejuice Company manufactures and sells one product for $34 per unit. The company maintains no beginning or ending inventories and its relevant range of production is 20,000 units to 30,000 units When Bettlejuice produces and sells 25,000 units, its unit costs are as shown in the table below: (Hint 1: within the relevant range, variable and fixed costs behave consistently. For example, a unit variable cost would be constant but a total variable cost would vary, and a unit fixed cost would vary but a total fixed cost would be constant. Hint 2: Each of the unit fixed costs in the table below are the average fixed manufacturing costs per unit when the production level is at 25,000 units. An average fixed cost per unit is the total fixed cost divided by the total number of units produced. You will need to compute a total fixed cost for each fixed cost item first and then to calculate a total fixed manufacturing cost, a total fixed period cost, or both.) Amount Per Unit Direct materials $ 8.00 Direct labor $ 5.00 Variable manufacturing overhead $ 1.00 Fixed manufacturing overhead $ 6.00 Fixed selling expense $ 3.50 Fixed administrative expense $ 2.50 Sales commissions $ 4.00 Variable administrative expense $ 1.00 Required: For financial accounting purposes, (1) what is the total amount of product costs incurred to make 25,000 units? (2) What is the total amount of period costs incurred to sell 25,000 units? If 24,000 units are produced, (1) what is the variable manufacturing cost per unit produced? (2) What is the average fixed manufacturing cost per unit produced? (Round your answers to 2 decimal places.) If 26,000 units are produced, (1) what is the variable manufacturing cost per unit produced? (2) What is the average fixed manufacturing cost per unit produced? (Rou
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.
Bettlejuice Company manufactures and sells one product for $34 per unit. The company maintains no beginning or ending inventories and its relevant range of production is 20,000 units to 30,000 units When Bettlejuice produces and sells 25,000 units, its unit costs are as shown in the table below: (Hint 1: within the relevant range, variable and fixed costs behave consistently. For example, a unit variable cost would be constant but a total variable cost would vary, and a unit fixed cost would vary but a total fixed cost would be constant. Hint 2: Each of the unit fixed costs in the table below are the average fixed
| Amount Per Unit | |
| Direct materials | $ 8.00 |
| Direct labor | $ 5.00 |
| Variable manufacturing overhead | $ 1.00 |
| Fixed manufacturing overhead | $ 6.00 |
| Fixed selling expense | $ 3.50 |
| Fixed administrative expense | $ 2.50 |
| Sales commissions | $ 4.00 |
| Variable administrative expense | $ 1.00 |
Required:
- For financial accounting purposes, (1) what is the total amount of product costs incurred to make 25,000 units? (2) What is the total amount of period costs incurred to sell 25,000 units?
- If 24,000 units are produced, (1) what is the variable manufacturing cost per unit produced? (2) What is the average fixed manufacturing cost per unit produced? (Round your answers to 2 decimal places.)
- If 26,000 units are produced, (1) what is the variable manufacturing cost per unit produced? (2) What is the average fixed manufacturing cost per unit produced? (Round your answers to 2 decimal places.)
- If 27,000 units are produced, (1) what are the total amounts of direct and indirect manufacturing costs incurred to support this level of production?
- What total incremental manufacturing cost will Bettlejuice incur if it increases production from 25,000 to 25,001 units? (Round your answer to 2 decimal places.)
- What is Bettlejuice's (1) contribution margin per unit? What is (2) its contribution margin ratio? (Round "Contribution margin per unit" to 2 decimal places and "Contribution margin ratio" to 1 decimal place.)
- What is Bettlejuice's (1) break-even point in unit sales? What is its (2) break-even point in dollar sales? (Do not round your intermediate values.)
- How much will Bettlejuice's net operating income increase if it can grow production and sales from 25,000 units to 26,500 units?
- What is Bettlejuice's margin of safety at a sales volume of 25,000 units? (Do not round your intermediate values.)
- What is Bettlejuice's degree of operating leverage at a sales volume of 25,000 units? (Round your answer to 1 decimal places.)
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