MARGINAL COSTS IN PRODUCTION DECISIONS
Cost of the last unit produced that implies the variable costs in the growth of production and the fixed costs that have been distributed among the units produced.
Not all of the data required to make decisions is provided by the accounting records.
marginal-costs-in-production-decisionsWhen a part is not manufactured, costs decrease in:
- Materials Workmanship
The Calas, SA factory produces several product lines that include certain parts, which can be
manufactured in-plant or externally. The cost of manufacturing a part called a bra is as follows:
Of the total selling and administrative expenses, $ 200,000 is fixed and $ 10 corresponds to each sold. This year this corresponds to $ 500,000 of variable selling expenses. As expected, when analyzing the income statement, the General Manager hesitates to accept this special request, arguing that it is not desirable because the production cost of each is $ 160.00, which is much higher than the price. sale special that is $ 120.00 apart from operating expenses. $ 8'000,000 / $ 50,000 u. = $ 160.00. But what is it that distorts the analysis of the General Dir.?
You are using the system. Total therefore includes relevant and irrelevant data to make a decision, it is
necessary to use the incremental or marginal analysis in this case on the basis of 30,000 u. additional which is the special request.
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