then sell through his parents business. The gift baskets will contain fruit, nuts and confectionary that will be supplied by the business. To see if this is a profitable business venture, there are a few things Tony should consider. These include, fixed and variable costs, location, competition and the number of baskets that need to be sold for Tony to breakeven. Once Tony has decided he wanted to pursue the gift basket venture, he must negotiate terms with his parents. They have agreed to…
example, a cell phone retail manager’s annual salary of sixty thousand dollars (total fixed cost) will remain the same if the store sells four thousand cell phone units or six thousand cell phone devices per year. Although the total fixed cost does not change, the fixed cost per device depends on the number of units sold. For instance, if the cell phone retail store sells four thousand devices in a year, the fixed cost (i.e., manager’s annual salary) per unit is fifteen dollars ($60,000…
cheese that still covers variable costs of production. Since fixed costs are not relevant to short term decisions variable costing gives more informative pricing information for the short term than absorption costing. Actual costing Actual costing is the same as under Costing System A. Except with variable costing element of this system, direct costs and variable overhead are traced to each job and recorded at actual cost while fixed overheads are expensed as period costs. Direct method This…
which is(are) the marginal costing and the absorption costing, the net profit difference will be reconciled between these two methods after the income statement is complete. Marginal and absorption costing are two different approaches to dealing with fixed manufacturing overheads and whether or not they are included in valuing inventory. The marginal cost is the total variable cost of the product, it consists of direct labour hours, direct materials and direct expenses, therefore when the…
Then the part is ejected by the ejector pins. There are many ways to fix the push rod on a fixed plate, this design uses the most commonly used form, which is, press the shoulder of the push rod between the counter bore and push plate of the push rod holder and tighten with the screw shoulder height and the depth corresponding to the depth of the counter bore left margin, after assembly with the push rod fixed plate with the margin, to ensure a high degree of consistency, to avoid the back and…
6.1 Case study There are two classifications of costs associated with construction projects, direct costs and indirect costs. Direct costs include the labor, material and equipment operating costs necessary to put work in place. Indirect costs include supervision, job and home office overhead, profit, financing, and the cost of inflation. Direct costs can be allocated to each activity on the project. Indirect costs, on the other hand, cannot be realistically prorated and assigned to each…
Case Problem: Specialty Toys Solution: 1. From the Case, Management team recommends ordering quantities of 15,000; 18,000; 24,000 and 28,000. Expected sales price = $24 per unit Product cost = $16 per unit And surplus products will be sold for $5 per unit Sales forecaster predicts demand = 20,000 units with a 0.95 probability that demand would be between 10,000 and 30,000 units. Let T be the demand for specialty’s toy. Based on normal distribution above with mean µ = 20,000 and standard…
Briefly compare and contrast job costing with process costing. Job costing, according to Heisinger and Hoyle (2012) is a “system of assigning costs used by companies that produce unique products or jobs” while on the other hand, a process costing is a “system of assigning costs used by companies that produce similar or identical units of product in batches employing a consistent process” (p. 242). In other words, in a job costing system, a company can accumulate production cost to a specific…
The definition of prairies is “prairies are ecosystems considered part of the temperate grasslands, savannas, and scrublands biome by ecologists, based on similar temperate climates, moderate rainfall, and a composition of grasses, herbs, and shrubs, rather than trees, as the dominant vegetation type. “The prairie animals are the American toad, badger, black-footed ferret, bison, black-tailed jack rabbit, bumble bee, burrowing owl, California condor, carrion beetle, common snipe, coyotes, deer,…
The firm was set up by Lewis Llewellyn and Dai Armstrong, the two close friends in a local cycle touring club. They produce traditional upright cycle, which imitate the 1940’s and 1950’s. In 1990s, the company expanded to meet the demand and they bought a 15,000 square feet warehouse with 2,000 square feet of office accommodation. The high quality hand- made bikes brought them good reputation and maintained high sales though they did not advertise much. However in 2010 the company has trouble as…