GL produces and sells single product with a standard quality. An analysis of its costing records revealed the following data: Selling price per unit GHS40 Variable cost per unit GHS20 Fixed cost GHS120,000 Existing capacity 16,000 units Required: Calcualte (i) Break-even point in units and in value (ii) Number of units to be sold to get a profit of GHS60,000 (iii) If fixed cost is reduced by GHS20,000 and results in 10% reduction in variable cost, what would be the net profit for the existing sales capacity? (iv) The selling price to be charged to show a profit of GHS60,000 on sales of 16,000 units. (v) Additional sales volume to meet GHS16,000 additional fixed cost.
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.
GL produces and sells single product with a standard quality. An analysis of its costing records revealed the following data:
Selling price per unit GHS40
Variable cost per unit GHS20
Fixed cost GHS120,000
Existing capacity 16,000 units
Required: Calcualte
(i) Break-even point in units and in value
(ii) Number of units to be sold to get a profit of GHS60,000
(iii) If fixed cost is reduced by GHS20,000 and results in 10% reduction in variable cost, what would be the net profit for the existing sales capacity?
(iv) The selling price to be charged to show a profit of GHS60,000 on sales of 16,000 units.
(v) Additional sales volume to meet GHS16,000 additional fixed cost.
Step by step
Solved in 5 steps