Sales $415,000 Total variable cost 302,950 Contribution margin $112,050 Total fixed cost 64,800 Operating income $ 47,250
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.
Sales Revenue Approach, Variable Cost Ratio, Contribution Margin
Ratio
Arberg Company’s controller prepared the following
coming year:
Required:
1. What is Arberg’s variable cost ratio? What is its contribution margin ratio?
2. Suppose Arberg’s actual revenues are $30,000 more than budgeted. By how much will
operating income increase? Give the answer without preparing a new income statement.
3. How much sales revenue must Arberg earn to break even? Prepare a contribution margin
income statement to verify the accuracy of your answer.
4. What is Arberg’s expected margin of safety?
5. What is Arberg’s margin of safety if sales revenue is $380,000?
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