Carlson Automotive Company manufactures fuel-injection systems. It manufactured and sold 60,000 unitsin 2018 and 64,000 units in 2019 at $25 per unit. In 2018, the firm used 75,000 pounds of alloy TPX–45 at$7.20 per pound and used 10,000 direct labor hours at an hourly wage rate of $30. In 2019, the firm used89,600 pounds of alloy TPX–45 at $6.80 per pound and used 10,847 direct labor hours at an hourly wagerate of $32. The total amount of all other expenses remains the same at $450,000 each year. Jerry Olson,CEO, was disappointed that although the total sales increased in 2019, operating income declined from$210,000 in 2018 to $193,616 in 2019.Required Analyze the following:1. Partial operational productivity of direct material and direct labor for both 2018 and 2019.2. Partial financial productivity of direct material and direct labor for both 2018 and 2019.3. Detailed partition of partial financial productivity.4. Total productivity for 2018 and 2019 as measured in both units and sales dollars.
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.
Carlson Automotive Company manufactures fuel-injection systems. It manufactured and sold 60,000 units
in 2018 and 64,000 units in 2019 at $25 per unit. In 2018, the firm used 75,000 pounds of alloy TPX–45 at
$7.20 per pound and used 10,000 direct labor hours at an hourly wage rate of $30. In 2019, the firm used
89,600 pounds of alloy TPX–45 at $6.80 per pound and used 10,847 direct labor hours at an hourly wage
rate of $32. The total amount of all other expenses remains the same at $450,000 each year. Jerry Olson,
CEO, was disappointed that although the total sales increased in 2019, operating income declined from
$210,000 in 2018 to $193,616 in 2019.
Required Analyze the following:
1. Partial operational productivity of direct material and direct labor for both 2018 and 2019.
2. Partial financial productivity of direct material and direct labor for both 2018 and 2019.
3. Detailed partition of partial financial productivity.
4. Total productivity for 2018 and 2019 as measured in both units and sales dollars.
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