Company provides cleaning services to commercial and residential customers. The commercial business segment provided services to 290 customers and the residential business segment provided services to 645 customers. Commercial Residential Total Service Revenue $93,000 $123,000 $216,000 Variable Costs 26,000 49,000 75,000 Fixed Costs 47,000 53,000 100,000 Operating Income $20,000 $21,000 $41,000 Identify the segment with the lower contribution margin ratio and show the amount of its contribution margin ratio. (Round your answer to two decimals.) A. Residential, 60.16% B. Residential, 39.84% C. Commercial, 21.51% D. Commercial, 44.96%
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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|
Commercial
|
Residential
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Total
|
|
Service Revenue
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$93,000
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$123,000
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$216,000
|
|
Variable Costs
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26,000
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49,000
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75,000
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Fixed Costs
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47,000
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53,000
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100,000
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Operating Income
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$20,000
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$21,000
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$41,000
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