Essay about Jet2 Task 4
WGU – JET2 Finical Analysis Task 4
To: Vice President
This report has been prepared to argue the case that the company’s current costing method should be changed to the activity based costing method. This report will review; the difference between traditional based costing and activity based costing; traditional split and allocations with activity based costing; and discusses the breakeven point for Competition bikes Inc. with regards to sales units and sales dollars for both CarbonLite and Titanium bikes.
The first item at hand is what kind of detail does activity based costing provide that is different than traditional costing?
The main difference between …show more content…
It is also important to note that if the company is offering different products for sale, each product/unit will need to be figured for the contribution margin per unit. The equation for contribution margin per unit is: Selling price per unit – variable costs per unit.
Titanium: 900-679=221 CarbonLite: 1495-1384=111
Thus the profit equation is now rewritten in terms of the contribution margin per unit assuming that the selling price and variable costs per unit are constants is:
Profit = Selling price per unit x Quantity of product sold – Variable costs per unit x Quantity of