mpany that manufactures facial towels has the capacity to produce 48,000 towels per month. The current mo
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.
A company that manufactures facial towels has the capacity to produce 48,000 towels per month.
The current monthly production is 30,000 towels.
As a result of a company strike at its current towel supplier, Aldaba, a luxury hotel chain, has offered to purchase 5,000 towels from the company at $51 per towel.
The selling price is normally $62 and the unit variable cost is 38. The monthly fixed costs are $32,000.
Should the company accept Aldaba's special request? Support your answer with the necessary calculations.
If you accept the special request, how much would the total contribution margin be?
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