Cost / management accounting -

In essence, the issue of volume of activity to divide by has become a larger issue as the relative amount of variable costs has diminished and the relative amount of fixed costs has increased. .
             Paradigm B - Calculating and Using Unit Product Costs Using the Distinction Between Fixed and Variable Costs.
             Variable costs .
             Direct materials 1.00 per unit.
             Direct labor 1.25 per unit.
             Manufacturing overhead .50 per unit.
             Marketing and administrative .25 per unit.
             Total 3.00 per unit.
             Fixed costs .
             Manufacturing overhead 350,000.
             Marketing and administrative 450,000.
             Total $800,000.
             Paradigm C: The era of activity- based costing.
             The activity-based costing (ABC) embodies two additional variable costs i.e. product complexity and product diversity, to develop a more accurate total cost per unit, which then improve the determination of selling prices and product mix decisions. There are three elements of variable manufacturing cost under ABC,.
             a. Costs that vary with units of product.
             b. Costs that vary with product complexity, such as number of batches.
             c. Costs that vary with product diversity, such as number of products.
             Paradigm C - Calculating and Using Unit Product Costs Using Activity-Based Costing.
             Variable costs .
             Direct materials $1.00 per unit.
             Direct labor 1.25 per unit.
             Variable Manufacturing overhead .
             Variable with number of units .50 per unit.
             Variable with number of batches .40 per unit.
             Variable with number of products .35 per unit.
             Variable marketing and administrative .25 per unit.
             Total $3.75 per unit.
             Fixed costs .
             Manufacturing overhead $ 175,000.
             Marketing and administrative 450,000.
             Total $ 625,000.
             Paradigm D: The era of market driven standard costs as opposed to engineering-driven standard costs.
             Paradigm D introduces using the selling price that the market will allow to help to determine the cost that the market will allow.