Evaluate the relevant cost, Cost Accounting

Assignment Help:



A company manufactures a single product and the data concerning the product is as follows:

- Sales price of $10
- Marginal cost of $6.
- Fixed costs are $60,000 p.a.


a. Number of units to break-even.

b. Sales at break-even point.

c. Contribution/sales (C/S) ratio

d. What number of units will need to be sold to achieve a profit of $ 20,000 p.a

e. What level of sales will achieve a profit of $ 20,000 p.a

f. Because of increasing costs the marginal cost is expected to rise to $ 6.50 per unit and fixed costs to $ 70,000. If the selling price cannot be increased what can be the number of units required to maintain a profit of $ 20,000 p.a?


(i) Your company regularly uses material X and currently has in inventory 500 kgs for which it paid $ 1,500 two weeks ago. If this were to be sold as raw material, it could be sold today for $ 2.00 per kg. You are aware that the material can be bought on the open market for $ 3.25 per kg, but it must be purchased in quantities of 1,000 kgs.


Evaluate the relevant cost of 600 kgs of material X to be used in a job for a customer.

(ii) In the short term decision-making context, which one of the subsequent would be a relevant cost:

- Specific development costs already incurred.

- The cost of special material which will be purchased.

- The original cost of raw materials currently in inventory which will be used on the project.

Related Discussions:- Evaluate the relevant cost

Activity Based Costing, Multiple Versus Single Overhead Rates, Activity Dri...

Multiple Versus Single Overhead Rates, Activity Drivers Deoro Company has identified the following overhead activities, costs, and activity drivers for the coming year: Deoro p

Determine cost per unit using marginal & absorption costing, Determine Cost...

Determine Cost per Unit By Using Marginal and Absorption Costing The given information was extracted from the book of a company for the year ended on date 31/12/2001. Outpu

Sources and uses of cash, There are different activities undertaken through...

There are different activities undertaken through a business that prove to be either source or use of cash. These can be categorizes under three broad categories that are: investin

Equity or debt securities investments, a.         What are the major equity...

a.         What are the major equity and/or debt securities investments? What amounts are reported in the balance sheet? How significant are those amounts to the company's overall

Attainable standards and current standards, Attainable Standards and Curren...

Attainable Standards and Current Standards Although the standard must be set high sufficient that achievable and it has to be worked for. Attainable standards must provide a c

Irr, The following data pertains to an investment proposal: Required invest...

The following data pertains to an investment proposal: Required investment $400,000 Annual cost savings $105,700 Projected life of investment 6 years Projected salvage value $0 Req

Use account analysis to determine fixed cost, Reef Office Supplies is inter...

Reef Office Supplies is interested in estimating the cost involved in hiring new employees. The following information is available regarding the costs of operating the Human Resour

prepare a simple balance sheet, Assume that Banc One receives a primary de...

Assume that Banc One receives a primary deposit of $1 million. The bank must keep reserves of 20 percent against its deposits. Prepare a simple balance sheet of assets and liabilit

Determine the acquisition cost, Waterloo Machining, Inc. paid $1,800,000 fo...

Waterloo Machining, Inc. paid $1,800,000 for factory equipment on January 1, 2012. It paid $100,000 for delivery and $220,000 for installation and modifications.  Waterloo received

Calculate annual revenue, Bentley Plastics Ltd. Has annual fixed cost of $4...

Bentley Plastics Ltd. Has annual fixed cost of $450,000, variable costs of $15 per unit and a contribution rate of 40% a.    What annual revenue is required to break even? b.

Write Your Message!

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd