Accounting Analysis

[Name of the Institute]

Accounting Analysis

Introduction

The material used in the manufacturing of the golf ball is as follows.

1. Plastic

2. Rubber

3. Polybutadiene (petroleum based polymer)

Estimated per unit price of plastic is $ 3

Estimated per unit price of rubber is $ 2

Estimated per unit price of polybutadene is$ 2

Direct material, estimated cost per unit is $ 1

Indirect labor per unit $ 10000

FOH $ 22000

Let profit margin per unit is $ 2

Let the cost of the material that should be five times more than the cost of the material.

i.e. 7 * 5 = 35.

As the market price of the golf ball is around $30 to $ 33. The company is going to sell the high quality product hence assuming the selling price of the golf ball to be $35.

Products to be sold = 35 - (Variable cost + profit per unit)

35-(7+2) = $ 26

Discussion

Activity based costing will be more suitable because it is completely different approach that improves the overheads but the cost relationship, that are cost and the activity. The cost is directly proportional to the activity performed. The approach of the activity based costing is much more flexible for the customers, the responsibilities of the management, and not only the products. The activity based costing is based on the basic objects of the cost and it also uses the activities as the building blocks for compiling the costs of all the other objects. If the activity based costing approach is used in developing a (Gaggioli, 2007), way to evaluate and justifying the manufacturing cycle time improvements. As the name suggests that the approach of the activity based costing is based on the performance of an activity. The use of the activity based costing according to the evolved over the last few years from a more prominent method for the product costing in order to be more specific method for the reduction of the cost, for an all embracing planning, systems to control, monitoring and encompassing.

The approach of an activity based costing force the manager in order to investigate the fixed cost accurately. It also helps the manager in order to identify the areas for the improvement that are inefficient along with recognizing the cost that could have been conceived fixed but those cost that are variable, semi variable for particular product.

Job Order Costing

The disadvantage of using the job costing approach is that the employees of the company have to keep all ...