Terminator, Inc., manufactures a motorcycle part in lots of250 units. The raw materials cost for the part is $150, and thevalue added in manufacturing 1 unit from its componentsis $300, for a total cost per completed unit of $450. The leadtime to make the part is 3 weeks, and the annual demand is4,000 units. Assume 50 working weeks per year.a. How many units of the part are held, on average, as cycleinventory? What is its value?b. How many units of the part are held, on average, as pipe-line inventory? What is its value?
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.
Terminator, Inc., manufactures a motorcycle part in lots of
250 units. The raw materials cost for the part is $150, and the
value added in manufacturing 1 unit from its components
is $300, for a total cost per completed unit of $450. The lead
time to make the part is 3 weeks, and the annual demand is
4,000 units. Assume 50 working weeks per year.
a. How many units of the part are held, on average, as cycle
inventory? What is its value?
b. How many units of the part are held, on average, as pipe-
line inventory? What is its value?
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
