The following information relates to Everstream Ltd: Variable manufacturing cost 500 Applied fixed manufacturing cost 160 Variable selling and administrative cost 130 Allocated fixed selling and administrative cost ? To achieve the target price of $1,035 per unit, the mark-up percentage based on total unit cost is 15%. Required: Calculate the allocated fixed selling and administrative cost per unit. Develop a cost-plus pricing formula that will result in the target price for each of the following bases: Variable manufacturing cost Absorption manufacturing cost Total variable cost
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.
The following information relates to Everstream Ltd:
|
Variable |
500 |
|
Applied fixed manufacturing cost |
160 |
|
Variable selling and administrative cost |
130 |
|
Allocated fixed selling and administrative cost |
? |
To achieve the target price of $1,035 per unit, the mark-up percentage based on total unit cost is 15%.
Required:
- Calculate the allocated fixed selling and administrative cost per unit.
- Develop a cost-plus pricing formula that will result in the target price for each of the following bases:
- Variable manufacturing cost
- Absorption manufacturing cost
- Total variable cost
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