scroll to top
Stuck on your essay?
Get ideas from this essay and see how your work stacks up
Word Count: 908
Executive Summary The full costing method associates fixed manufacturing costs with units of production and the amount of fixed manufacturing cost offset against revenue varies with the relationship between the number of units produced and the number sold If production temporarily exceeds unit sales some fixed manufacturing costs are deferred to future periods and responsibility margin will be higher than would be reported under variable costing If fewer units are produced during the period than are sold fixed costs deferred in prior periods are offset against current revenue as inventory is drawn down Thus responsibility margin reported for the current period will be lower than would result from variable costing Under variable costing the level of production has no effect on responsibility margin because all fixed manufacturing costs are offset against revenue as they are incurred regardless of the level of production A manufacturing company typically has departments specializing in purchasing production sales shipping accounting finance and personnel Production departments and sales departments often are further subdivided along different product lines or geographical areas Many companies produce multiple products from common raw materials and a shared production process In such manufacturing processes two business issues arise One is how to allocate joint cost among the various types of products manufactured The second incremental type of decision is whether some types of products should be processed further to create an even more valuable finished good Case Context Groton Company offered Craik Veneer Company 20 per thousand feet for 1 million feet per month of sound backs in 124-inch birch veneer for the next 12 months The production manager did not want to accept the offer based on the argument that the cost of production per thousand feet is at least 2444 He arrived at this figure by dividing the joint cost of the birch block in proportion
@Kibin is a lifesaver for my essay right now!!
- Sandra Slivka, student @ UC Berkeley
Wow, this is the best essay help I've ever received!
- Camvu Pham, student @ U of M
If I'd known about @Kibin in college, I would have gotten much more sleep
- Jen Soust, alumni @ UCLA