Filhaal Electronics LLC also plans to introduce a new model of mobile phone in the market. The expected life cycle of the product is three years. The company has been adopting the traditional method of costing. Imagine you are the management accountant of the company and you suggest the management to adopt Life Cycle Costing for the mobile phone instead of traditional method of costing. You have the following information at your disposal: Mobile phone year 1 year 2 year 3 Research and development 1200 Production cost per unit 110 190 175 Customer service cost per unit 32 29 28 Advertising and sales promotion cost 25 28 14 Retirement and disposal cost 250 Units produced and sold 200 400 700 The Life Cycle Cost per unit will be: a. RO 227.308 b. RO 218.461 c. RO 219.654 d. RO 227.305
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.
Filhaal Electronics LLC also plans to introduce a new model of mobile phone in the market. The expected life cycle of the product is three years. The company has been adopting the traditional method of costing. Imagine you are the
|
Mobile phone |
year 1 |
year 2 |
year 3 |
|
Research and development |
1200 |
|
|
|
Production cost per unit |
110 |
190 |
175 |
|
Customer service cost per unit |
32 |
29 |
28 |
|
Advertising and sales promotion cost |
25 |
28 |
14 |
|
Retirement and disposal cost |
|
|
250 |
|
Units produced and sold |
200 |
400 |
700 |
The Life Cycle Cost per unit will be:
RO 227.308
RO 218.461
RO 219.654
RO 227.305
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