The Reward One Company manufactures windows. Its manufacturing plant has the capacity to produce 12,000 windows each month. Current production and sales are 10,000 windows per month. The company normally charges $250 per window. Variable costs that vary with number of units produced Direct materials $ 600,000 Direct manufacturing labor 700,000 Variable costs (for setups, materials handling, quality control, and so on) that vary with number of batches, 100 batches × $1,500 per batch 150,000 Fixed manufacturing costs 250,000 Fixed marketing costs 400,000 Total costs $ 2,100,000 Reward One has just received a special one-time-only order for 2,000 windows at $225 per window. Accepting the special order would not affect the company's regular business or its fixed costs. Reward One makes windows for its existing customers in batch sizes of 100 windows (100 batches × 100 windows per batch = 10,000 windows). The special order requires Reward One to make the windows in 25 batches of 80 windows.
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
Company manufactures windows. Its manufacturing plant has the capacity to produce
windows each month. Current production and sales are
windows per month. The company normally charges
per window.
Variable costs that vary with number of units produced Direct materials $ 600,000 Direct manufacturing labor 700,000 Variable costs (for setups, materials handling, quality control, and so on) that vary with number of batches, 100 batches × $1,500 per batch 150,000 Fixed
has just received a special one-time-only order for
windows at
per window. Accepting the special order would not affect the company's regular business or its fixed costs.
makes windows for its existing customers in batch sizes of
windows
batches ×
windows per batch =
windows). The special order requires
to make the windows in
batches of
windows.
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