Evaluate the relevant cost, Cost Accounting

Assignment Help:

Question

PART A

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.

Determine

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?

PART B

(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.

Required:

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

Assessment item 2, QUESTION 1 Job costing Create a spreadsheet solution to...

QUESTION 1 Job costing Create a spreadsheet solution to the following problem. Follow the template provided. Play the Job cost podcasts and work through the example problem in tho

Test accounting of monetary instruments, This question tested the accountin...

This question tested the accounting of monetary instruments, especially an asset held at reasonable value through loss or profit. The preparation of the journal for subsequent and

Mining industry, are exploration costs of a mining company an asset or an e...

are exploration costs of a mining company an asset or an expense

#title.Case Study., A retail dealer in garments is currently selling 24000 ...

A retail dealer in garments is currently selling 24000 shirts annually. He supplies the following details for the year ended 31st December,2007. Rs Selling Price per shirt

Sales revenue variance (srv), SALES REVENUE VARIANCE (SRV) The word 'Sa...

SALES REVENUE VARIANCE (SRV) The word 'Sales Variance' is indicated by the expression 'operating profit variance due to sales' by ICMA.  It is described as 'the difference betw

Direct material price variances, Direct Material Price Variances The t...

Direct Material Price Variances The two direct material price variances can be summarized given as: From our basic data first before the beginning of the discussion on

What is operating costing, Describe Operating Costing The Chartered Ins...

Describe Operating Costing The Chartered Institute of Management Accountants, London defines "operating cost" as "the cost of providing a service." Services performed may be in

Direct labour efficiency variances, Direct Labour Efficiency Variances ...

Direct Labour Efficiency Variances It is the difference between the standard hours allowed for the actual production achieved and the hours actually worked, all valued at THE

Calculate the pay back period after tax cash flows, An investment alternati...

An investment alternative in a project requires a capital cost of $102 millions completed at time zero. The investment will produce a stream of revenue of $50 millions per year ove

Write Your Message!

Captcha
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