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You're employed for a agency of administration consultants that gives help to new companies. One in every of your shoppers is Shorttress Manufacturing, an organization that manufactures a small, however important, element for the specialised lighting business. Shorttress is a brand new firm (and a brand new consumer in your employer) and you've got been assigned the duty of advising them of their choices for financing their stock in the course of the first few months.
The advertising and marketing consultants have advised you that the corporate ought to have no less than three months of stock readily available so it may meet all calls for from Shorttress's prospects.
The annual manufacturing of the Shorttress element is projected to be 120,000 items. Annual direct labour and direct materials prices collectively are estimated at $300,000 per yr. Variable manufacturing prices are estimated to be $180,000 per yr; fastened manufacturing prices are projected to be $500,000 per yr. Mounted advertising and marketing and administration prices are estimated at $700,000 per yr. These projections are all for the corporate's first yr of enterprise.
(a)Assuming that Shorttress should maintain three months of the element in stock, what's the price of the three-month stock utilizing variable costing? What's the price of stock utilizing absorption costing?Get accounting task homework assist