CVP with taxes. Lighthouse Company, maker of quality flashlights, has experienced a steady growth in sales for the past five years. However, increased competition has led Mr. Das, the CEO to believe that to maintain the company's present growth requires an aggressive advertising campaign next year. To prepare the next year's advertising campaign, the company's accountant has prepared and presented to Mr. Das the following data for the current year, Year 1 Cost Schedule Variable Costs: Direct Labor: Direct Material Variable Overhead Total Variable costs $10.00 Per Flashlight $ 4.50 $ 2.00 $16.50 per Flashlight Fixed Costs: Manufacturing Selling Administrative Total Fixed Costs $ 40,000 30,000 80,000 $ 150,000 Selling price per Flashlight Expected Sales, Year 1 (25,000) Tax Rate: 35% 40 .00 $1,000,000 Mr. Das has set the sales target for Year 2 at a level of $1,120,000 or (28,000 flashlights) Show work/calculation What will be the after-tax break-even point in sales dollars for Year 2 if the firm spends the additional $40,000? If the firm spends the additional $40,000 in advertising in Year 2, what is the sales level in dollars required to equal Year 1 after-tax operating profit? At a sale level of 28,000 units, what is the minimum amount the firm can spend on advertising to earn an after-tax operating profit of $75,000?
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.
CVP with taxes. Lighthouse Company, maker of quality flashlights, has experienced a steady growth in sales for the past five years. However, increased competition has led Mr. Das, the CEO to believe that to maintain the company's present growth requires an aggressive advertising campaign next year. To prepare the next year's advertising campaign, the company's accountant has prepared and presented to Mr. Das the following data for the current year, Year 1
Cost Schedule
Variable Costs: Direct Labor: Direct Material Variable Overhead Total Variable costs |
$10.00 Per Flashlight $ 4.50 $ 2.00 $16.50 per Flashlight
|
Fixed Costs: Manufacturing Selling Administrative Total Fixed Costs |
$ 40,000 30,000 80,000 $ 150,000 |
Selling price per Flashlight Expected Sales, Year 1 (25,000) Tax Rate: 35% |
40 .00
$1,000,000 |
Mr. Das has set the sales target for Year 2 at a level of $1,120,000 or (28,000 flashlights) Show work/calculation
- What will be the after-tax break-even point in sales dollars for Year 2 if the firm spends the additional $40,000?
- If the firm spends the additional $40,000 in advertising in Year 2, what is the sales level in dollars required to equal Year 1 after-tax operating profit?
- At a sale level of 28,000 units, what is the minimum amount the firm can spend on advertising to earn an after-tax operating profit of $75,000?
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