Han-3742 company manufactures 25,000 units of part T-25 each year. The company's cost per unit for part T-25 is: Direct materials $3.90 Direct labor 8.00 Variable manufacturing overhead Fixed manufacturing overhead 2.10 6.00 $20.00 Total cost per part An outside supplier has offered to sell 25,000 units of part T-25 each year to Han-3742 for $18 per unit. If Han-3742 accepts this offer, it can rent out the facilities now being used to manufacture part T-25 to another company at an annual rental of $75,000. However, Han-3742 has calculated that two-thirds of the fixed manufacturing overhead being applied to part T-25 will continue even if the part is bought from the outside supplier. What is the financial advantage of accepting the outside supplier's offer? O $27,000 O $25.000
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.
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