Blossom Inc. manufactures two electronic products, widgets and gadgets, and has a capacity of 2,700 machine hours. Prices and costs for each product are as follows: Widget Gadget Selling price per unit $267 $347 Variable costs per unit Direct materials 34 52 Other direct costs 14 29 Variable Manufacturing overhead costs* 47 61 * Variable manufacturing overhead costs are applied at a rate of $57 per machine hour. Steering Industries, a potential client, has offered $266 per unit to Blossom for 266 special units. These 266 units would incur the following production costs and
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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Widget
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Gadget
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|||
|---|---|---|---|---|
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Selling price per unit
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$267 | $347 | ||
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Variable costs per unit
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||||
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Direct materials
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34 | 52 | ||
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Other direct costs
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14 | 29 | ||
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Variable
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47 | 61 |
* Variable manufacturing overhead costs are applied at a rate of $57 per machine hour.
Steering Industries, a potential client, has offered $266 per unit to Blossom for 266 special units. These 266 units would incur the following production costs and time:
| Direct materials | $10,234 | |
| Other direct costs | $4,700 | |
| Machine hours | 242 |
| Total contribution margin | $enter the total contribution margin in dollars |
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Widget
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Gadget
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New Order
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||||
|---|---|---|---|---|---|---|
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CM per unit
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$enter a dollar amount | $enter a dollar amount | $enter a dollar amount | |||
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CM per machine hour
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$enter a dollar amount | $enter a dollar amount | $enter a dollar amount |
Determine whether Blossom should produce the units for the special order instead of widget or gadget units.
| Blossom select an option produce the units for the special order instead of widget or gadget units. |
| Opportunity cost | $enter the opportunity cost in dollars |
| Net profit from doing the special order | $enter the net profit from doing the special order in dollars |
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