Outdoor Luggage, Incorporated, makes high-end hard-sided luggage for sports equipment. Data concerning three of the company’s most popular models appear below. Ski Guard Golf Guard Fishing Guard Selling price per unit $ 230 $ 330 $ 265 Variable cost per unit $ 90 $ 150 $ 105 Plastic injection molding machine processing time required to produce one unit 4 minutes 10 minutes 5 minutes Pounds of plastic pellets per unit 5 pounds 11 pounds 12 pounds Required: 4. Which product offers the most profitable use of the plastic pellets? 5. Which product has the largest contribution margin per unit?
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.
Outdoor Luggage, Incorporated, makes high-end hard-sided luggage for sports equipment. Data concerning three of the company’s most popular models appear below.
| Ski Guard | Golf Guard | Fishing Guard | ||||
|---|---|---|---|---|---|---|
| Selling price per unit | $ 230 | $ 330 | $ 265 | |||
| Variable cost per unit | $ 90 | $ 150 | $ 105 | |||
| Plastic injection molding machine processing time required to produce one unit | 4 | minutes | 10 | minutes | 5 | minutes |
| Pounds of plastic pellets per unit | 5 | pounds | 11 | pounds | 12 | pounds |
Required:
4. Which product offers the most profitable use of the plastic pellets?
5. Which product has the largest contribution margin per unit?
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