Budgetary control and standard costing have the common objective of cost control by establishing pre-determined targets. These two techniques are similar in certain respects but differ in respect of other points. -Require to:Compare and contrast budgetary control and standard costing.
Unicorn Company manufactures a device that is used by internet users to boost Wi-Fi signals. The following data relates to the first month of operation:
Beginning inventory: 0 units
Units produced: 40,000 units
Units sold: 35,000 units
Selling price: OMR72 per unitMarketing and administrative expenses:
Variable marketing and administrative expenses per unit: OMR2.4
Fixed marketing and administrative expenses per month: OMR672,000Manufacturing costs:
Direct materials cost per unit: OMR18
Direct labour cost per unit: OMR8.4
Variable manufacturing overhead cost per unit: OMR2.4
Fixed manufacturing overhead cost per month: OMR768,000 Management is anxious to see the success as well as profitability of newly designed unique booster. Required to:
Calculate unit product cost
Prepare income statement under marginal costing system and absorption costing system.
Prepare a schedule to reconcile the net operating income under variable and absorption costing system and state the reasons for difference in profit under these costing systems.
Compare marginal costing system and absorption costing system. Also, analyse which method is better and why.
3. Break Even Analysis is a concept in Marginal Costing, which is a useful tool to study the relation between fixed costs and variable costs and revenue.
-Explain the benefits and limitations of Break Even Analysis.
-Provide your own numerical data and show the calculations for Break Even point in units and in Omani Rials, explaining how Break Even Analysis helps in decision making.
-Construct a Break Even Chart showing all its components.
-Provide a conclusion
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