The following income statements illustrate different cost structures for two competing companies: Income Statements Company Name Jordan Gibson Number of customers (a) Sales revenue (a × $200) Variable cost (a × $185) Variable cost (a × $0) Contribution margin Fixed cost 89 89 $ 17,800 N/A $ 17,800 (16,465) N/A 1,335 17,800 |(16,465) $ 1,335 Net income $ 1,335 Required a. Reconstruct Jordan's income statement, assuming that it serves 178 customers when it lures 89 customers away from Gibson by lowering the sales price to $100 per customer. b. Reconstruct Gibson's income statement, assuming that it serves 178 customers when it lures 89 customers away from Jordan by lowering the sales price to $100 per customer.
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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