Earthy Sdn Bhd manufactures a product, X, which has the following standard costs per unit: Direct material 38$ Direct wages 27$ Production overhead 600,000$ Selling & Distribution overhead 400,000$ Additional information: i. The production overheads and selling and distribution are mixed costs were 25% and 39 % of the cost varies with the number of units produced. ii. The administration and storage costs incurred are RM 260,000 and RM 185,000 which are fixed in nature. iii. The annual sales revenue is RM 3,000,000. The company managed to sell out all of product X produced for that year iv. The selling price is RM 250 per unit. a) CALCULATE the break-even point in units and value for the company. b)EXPLAIN what would happen to the break-even point in units and value if the company increase its selling price by 30%. (please provide working solutions) c)If the company plans to increase its current profit to RM 1,500,000 next year, CALCULATE the sales in units and the value that they need to incur. An increase in profit would result in an increase in fixed cost by 20%.
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.
Earthy Sdn Bhd manufactures a product, X, which has the following
Direct material 38$
Direct wages 27$
Production overhead 600,000$
Selling & Distribution overhead 400,000$
Additional information:
i. The production
39 % of the cost varies with the number of units produced.
ii. The administration and storage costs incurred are RM 260,000 and RM 185,000 which
are fixed in nature.
iii. The annual sales revenue is RM 3,000,000. The company managed to sell out all of
product X produced for that year
iv. The selling price is RM 250 per unit.
a) CALCULATE the break-even point in units and value for the company.
b)EXPLAIN what would happen to the break-even point in units and value if the company increase its selling price by 30%. (please provide working solutions)
c)If the company plans to increase its current profit to RM 1,500,000 next year,
CALCULATE the sales in units and the value that they need to incur. An increase in profit would result in an increase in fixed cost by 20%.
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