The DELL Company is in the process of developing a new product called (ZZ). The product current design carries with it following costs: Statements Total Costs Total variable production costs 780,000 Fixed manufacturing overhead 220,000 Total production costs 1,000,000 Total selling, general, and administrative expenses 400,000 Total costs and expenses 1,400,000 - Units to be Produced 40,000. The company requires a $ 320,000 profit, and 20% return on assets (ROA). The company uses assets totaling $ 1,600,000 in producing. Instructions: a. Compute the price of (ZZ) using the Gross margin pricing method ( b. Compute the price of (ZZ) using the Return on assets pricing method. c. Prepare income statement to support your answer. ·
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.
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