LaVerle, Inc., manufactures a product that sells for $480. The variable costs per unit are as follows: Direct materials $160 Direct labor 100 Variable manufacturing overhead 40 During the year, the budgeted fixed manufacturing overhead is estimated to be $100,000, and budgeted fixed selling and administrative costs are expected to be $40,000. Variable selling costs are $20 per unit. Required: a. Determine the break-even point in units. b. Determine the number of units that must be sold to earn $60,000 in profit before taxes. c. Determine the number of units that must be sold to generate an after-tax profit of $60,000 if there is a 40 percent tax rate
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.
- LaVerle, Inc., manufactures a product that sells for $480. The variable costs per unit are as follows:
|
Direct materials |
$160 |
|
Direct labor |
100 |
|
Variable manufacturing overhead |
40 |
During the year, the budgeted fixed manufacturing overhead is estimated to be $100,000, and budgeted fixed selling and administrative costs are expected to be $40,000. Variable selling costs are $20 per unit.
Required:
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a. |
Determine the break-even point in units. |
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|
|
|
b. |
Determine the number of units that must be sold to earn $60,000 in profit before taxes. |
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|
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c. |
Determine the number of units that must be sold to generate an after-tax profit of $60,000 if there is a 40 percent tax rate |
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