Power Corp. makes 2 products: blades for table saws and blades for handsaws. Each product passes through the sharpening machine area, which is the chief constraint during production. Handsaw blades take 15 minutes on the sharpening
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.
Power Corp. makes 2 products: blades for table saws and blades for handsaws. Each product passes through the sharpening machine area, which is the chief constraint during production. Handsaw blades take 15 minutes on the sharpening machine and have a contribution margin per blade of $15. Table saw blades take 20 minutes on the sharpening machine and have a contribution margin per blade of $35.
PLEASE NOTE: All dollar amounts are rounded to whole dollars and shown with "$" and commas as needed (i.e. $12,345). For units of blades for table saws and hand saws, use commas as needed (i.e. 1,234).
Part A: If it is assumed that Power Corp. has 5,000 hours available on the sharpening machine to service a minimum demand for each product of 4,000 units, how much will profit increase if 200 more hours of machine time can be obtained? [HINT - You should convert the hours to minutes.]
- What is the contribution margin per the constrained resource for table saw blades? .________
- What is the contribution margin per the constrained resource for handsaw blades? ___________
- Given the answers to the first two questions, which product gets all of the additional 200 hours? .__________
Please note: Your answer is either "Table Saw Blades" or "Handsaw Blades" - capital first letters and no quotes. - How much will profit increase if 200 more hours of machine time can be obtained? _______________
Part B: If it is assumed that Power Corp. has 5,000 hours available on the sharpening machine to service a minimum demand for each product of 4,000 units, how many of each product should be made? [HINT - You should convert the hours to minutes.]
- Given the 5,000 available hours, how many handsaw blades should Power Corp. make? ____________
- Given the 5,000 available hours, how many table saw blades should Power Corp. make? ____________
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