Gent Designs requires three units of part A for every unit of A1 that it produces. Currently, part A is made by Gent, with these per-unit costs in a month when 4,000 units were produced: Direct materials $4.00 Direct labor 1.50 Manufacturing overhead 1.20 Total $6.70 Variable manufacturing overhead is applied at $1.00 per unit. The other $0.20 of overhead consists of allocated fixed costs. Gent will need 5,900 units of part A for the next year’s production.
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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Gent Designs requires three units of part A for every unit of A1 that it produces. Currently, part A is made by Gent, with these per-unit costs in a month when 4,000 units were produced:
Direct materials $4.00 Direct labor 1.50 Manufacturing overhead 1.20 Total $6.70 Variable manufacturing overhead is applied at $1.00 per unit. The other $0.20 of overhead consists of allocated fixed costs. Gent will need 5,900 units of part A for the next year’s production.
Cory Corporation has offered to supply 5,900 units of part A at a price of $6.90 per unit. If Gent accepts the offer, all of the variable costs and $800 of the fixed costs will be avoided.
A. Calculate the differential cost?
Cost to buy $fill in the blank 1 Cost to make fill in the blank 2 Differential cost $fill in the blank 3 B. Should Gent Designs accept the offer from Cory Corporation?
Gent Designs
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