Castleton company has analyzed the costs of producing and selling 5,000 units of its sole product to be sold as follows: Direct materials...................................................................Rs. 60,000 Direct labor................................................................................ 40,000 Variable factory overhead ......................................................... 20,000 Fixed factory overhead.............................................................. 30,000 Variable marketing and administrative expenses...................... 10,000 Fixed marketing and administrative expenses........................... 15,000 Required: i) Compute the number of units to break even at a per unit sales price of Rs.38.50 ii) Determine the number of units that must be sold to produce an Rs.18,000 profit at a Rs.40 per unit sales price iii) Determine the price castleton must charge at a 5000 unit sales level, in order to get a profit equal to 20% of sales.
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.
Castleton company has analyzed the costs of producing and selling 5,000
units of its sole product to be sold as follows:
Direct materials...................................................................Rs. 60,000
Direct labor................................................................................ 40,000
Variable factory overhead ......................................................... 20,000
Fixed factory overhead.............................................................. 30,000
Variable marketing and administrative expenses...................... 10,000
Fixed marketing and administrative expenses........................... 15,000
Required:
i) Compute the number of units to break even at a per unit sales price of
Rs.38.50
ii) Determine the number of units that must be sold to produce an
Rs.18,000 profit at a Rs.40 per unit sales price
iii) Determine the price castleton must charge at a 5000 unit sales level, in
order to get a profit equal to 20% of sales.
b) Make a comparative study of process
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