Burchard Company sold 45,000 units of its only product for $18.00 per unit this year. Manufacturing and selling the product required $320,000 of fixed costs. Its per unit variable costs follow $5.00 Direct materials Direct labor 4.00 Variable overhead costs 0.50 Variable selling and administrative costs 0.30 For the next year, management will use a new material, which will reduce direct materials costs to $1.50 per unit and reduce direct labor costs to $2.80 per unit. Sales, total fixed costs, variable overhead costs per unit, and variable selling and administrative costs per unit will not change. Management is also considering raising its selling price to $23.40 per unit, which would decrease unit sales volume to 38,250 units. Required: 1. Compute the contribution margin per unit from (a) using the new material and (b) using the new material and increasing the selling price (Round your answers to 2 decimal places.) With new material With new material and price increase Sales price per unit Variable costs per unit Direct materials Direct labor Variable overhead Variable selling & administrative expenses Variable costs per unit 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.
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