# Unit cost analysis The management of Colfax Manufacturing Inc. uses cost information from job sheets to assess its performance, Information on the total, product type, and quantity of items produced is as follows: a. Develop a graph for each product (three graphs), with Job No. (in date order) on the horizontal axis and unit cost on the vertical axis. Use this information to determine Colfax Manufacturing's cost performance over time for the three products. b. What additional information would you require to investigate Colfax Manufacturing's cost performance more precisely?

### Survey of Accounting (Accounting I)

8th Edition
Carl Warren
Publisher: Cengage Learning
ISBN: 9781305961883

### Survey of Accounting (Accounting I)

8th Edition
Carl Warren
Publisher: Cengage Learning
ISBN: 9781305961883

#### Solutions

Chapter
Section
Chapter 10, Problem 10.1MBA
Textbook Problem

## Unit cost analysis The management of Colfax Manufacturing Inc. uses cost information from job sheets to assess its performance, Information on the total, product type, and quantity of items produced is as follows: a. Develop a graph for each product (three graphs), with Job No. (in date order) on the horizontal axis and unit cost on the vertical axis. Use this information to determine Colfax Manufacturing's cost performance over time for the three products. b. What additional information would you require to investigate Colfax Manufacturing's cost performance more precisely?

Expert Solution
To determine

(a)

Concept introduction:

Direct Cost:

The cost which is directly related to the product and affects those items directly which contributes to the revenue generation in the business is referred as direct cost. It makes a direct relation to the manufacturing cost.

Indirect Cost:

The cost which is not directly related to the product and does not affect those items directly which contributes to the revenue generation in the business is referred as indirect cost. These can be fixed cost or such costs are incurred as a whole and cannot be make relation to manufacturing cost.

To construct:

The graph for each product.

### Explanation of Solution

Thetable for computing per unit cost of mercury is as follows:

 Cost per unit of mercury Date Job no. Quantity  (a) Amount   ($) (b) Cost per unit ($)  (ba) Jan.13 1 180 4,500 25 Mar.14 49 550 12,100 22 Jun.12 83 400 7,200 18 Nov.14 109 725 10,150 14

The graph for the product is as follows:

The table for computing per unit cost of venus is as follows:

 Cost per unit of venus Date Job no. Quantity  (a) Amount   ($) (b) Cost per unit ($)  (ba) Jan.29 26 1,020 8,160 8 Feb
Expert Solution
To determine

(b)

Concept introduction:

Direct Cost:

The cost which is directly related to the product and affects those items directly which contributes to the revenue generation in the business is referred as direct cost.It makes a direct relation to the manufacturing cost.

Indirect Cost:

The cost which is not directly related to the product and does not affect those items directly which contributes to the revenue generation in the business is referred as indirect cost. These can be fixed cost or such costs are incurred as a whole and cannot be make relation to manufacturing cost.

The information required for analyzing the manufacturing cost in more detail.

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