Moonbeam Company manufactures toasters. For the first 8 months of 2020, the company reported the following operating results while operating at 75% of plant capacity: Sales (350,000 units) $4,375,000 Cost of goods sold 2,600,000 Gross profit 1,775,000 Operating expenses 840,000 Net income $935,000 Cost of goods sold was 70% variable and 30% fixed. Operating expenses were 80% variable and 20% fixed. Moonbeam receives aspecial order for 15000 toasters at $7.60 each from Luna Company. Acceptance of the order would result in an additional $3000 of shipping cost but no increase in fixed assets. a) Prepare an incremental analysis for the special order b) Should Moonbeam accept the special order. Why or why not?
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.
Moonbeam Company manufactures toasters. For the first 8 months of 2020, the company reported the following operating results while operating at 75% of plant capacity:
Sales (350,000 units) $4,375,000
Cost of goods sold 2,600,000
Gross profit 1,775,000
Operating expenses 840,000
Net income $935,000
Cost of goods sold was 70% variable and 30% fixed. Operating expenses were 80% variable and 20% fixed. Moonbeam receives aspecial order for 15000 toasters at $7.60 each from Luna Company. Acceptance of the order would result in an additional $3000 of shipping cost but no increase in fixed assets.
a) Prepare an incremental analysis for the special order
b) Should Moonbeam accept the special order. Why or why not?
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