The Old Towne Manufacturing Company produces the following three products: Saws Knives Measuring Tapes Selling price per unit $40 $16 $50 Variable costs per unit 28 12 30 Contribution per unit $12 $ 4 $20 Fixed costs are $76,000 per year. 50% of all sales in units are Saws, 30 percent are Knives, and 20 percent are Measuring Tapes.. Required: Calculate the following values: Break-even point in total units Number of Saws that will be sold at break-even Total sales in units to obtain a before-tax profit of $19,000
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.
The Old Towne Manufacturing Company produces the following three products:
|
|
Saws |
Knives |
Measuring Tapes |
|
Selling price per unit |
$40 |
$16 |
$50 |
|
Variable costs per unit |
28 |
12 |
30 |
|
Contribution per unit |
$12 |
$ 4 |
$20 |
Fixed costs are $76,000 per year.
50% of all sales in units are Saws, 30 percent are Knives, and 20 percent are Measuring Tapes..
Required:
Calculate the following values:
- Break-even point in total units
- Number of Saws that will be sold at break-even
- Total sales in units to obtain a before-tax profit of $19,000
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